Asian Infrastructure Investment Bank (AIIB)

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region. It was officially established on December 25, 2015, with its headquarters located in Beijing, China. The bank’s primary focus is to foster sustainable economic development, create wealth, and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors.

History

The concept of AIIB was first proposed by Chinese President Xi Jinping during his visit to Southeast Asian countries in October 2013. The initiative gained support from various countries, and on October 24, 2014, 21 Asian countries signed a Memorandum of Understanding (MOU) to establish the AIIB. The bank officially opened for business on January 16, 2016, with 57 founding member countries.

Membership

As of May 2023, AIIB has 106 approved members worldwide, including 46 regional and 60 non-regional members. Regional members are those located within the Asia-Pacific region, while non-regional members are from other parts of the world. Notable members include China, India, Russia, the United Kingdom, and Germany. The United States and Japan, however, have not joined the bank.

Governance Structure

AIIB is governed by a Board of Governors, a Board of Directors, and a Senior Management Team. The Board of Governors is the bank’s highest decision-making body, consisting of representatives from each member country. The Board of Directors, composed of 12 members, is responsible for the general operations of the bank. The Senior Management Team, led by the President, oversees the day-to-day management of the bank.

Capital Structure

The authorized capital stock of AIIB is USD 100 billion, divided into 1 million shares, each having a par value of USD 100,000. China is the largest shareholder in the bank, followed by India and Russia. The voting power of each member is determined by their capital subscription.

Projects and Investments

AIIB prioritizes investments in sustainable infrastructure, cross-border connectivity, and private capital mobilization. The bank finances projects in various sectors, including energy, transportation, urban development, and environmental protection. As of April 2023, AIIB has approved over 200 projects, with a total investment of more than USD 30 billion.

Some notable projects funded by AIIB in India include:

• Andhra Pradesh 24×7 Power for All Project: A USD 160 million loan to improve the quality and reliability of power supply in Andhra Pradesh.
• Gujarat Rural Roads Project: A USD 329 million loan to improve the rural road connectivity in Gujarat.

Cooperation with Other Institutions

AIIB works closely with other multilateral development banks, such as the World Bank, the Asian Development Bank (ADB), and the European Bank for Reconstruction and Development (EBRD), to co-finance projects and share expertise. The bank also collaborates with the private sector to mobilize additional resources and promote public-private partnerships.

Criticisms and Controversies

Despite its growing prominence, AIIB has faced some criticisms and controversies. Some concerns include:

• Perceived dominance of China in the bank’s decision-making processes, given its status as the largest shareholder.
• Potential competition with existing multilateral development banks, such as the World Bank and ADB.
• Concerns over the bank’s environmental and social safeguards, particularly in relation to large-scale infrastructure projects.

However, AIIB has maintained that it adheres to high standards of governance, transparency, and sustainability, and is committed to working with all stakeholders to address these concerns.

Future Outlook

As the demand for infrastructure financing in Asia continues to grow, AIIB is expected to play an increasingly important role in the region’s development. The bank has set ambitious targets for its investment portfolio and aims to become a leading financier of sustainable infrastructure projects. By fostering regional cooperation and promoting economic growth, AIIB has the potential to contribute significantly to the long-term prosperity of the Asia-Pacific region.