Terming the formation of Asian Infrastructure and Investment Bank (AIIB) as a positive development, business leaders Monday said the bank to be opened with major share of China could galvanise growth in emerging Asia apart from boosting lingering global recovery.
While commenting on the formation of AIIB, President Pak-China Joint Chamber of Commerce and Industry (PCJCCI), Shah Faisal Afridi said the new bank will provide rich resource capital base for infrastructure financing, which is good for the regional development. "It will help to bridge the infrastructure deficit by playing a complimentary role along with other financial institutions like ADB and IMF and work for good governance in Asia," said Afridi.
Finance Minister Mohammad Ishaq Dar said the Asian Infrastructure Investment Bank will provide financial support to developing countries in Asia for infrastructure development to promote regional connectivity. Talking about the controversies regarding the formation of Bank, Faisal Afridi explicated that the idea of the AIIB was put forward more than a year ago; not to undermine either the World Bank or the ADB, but to take an initiative for sustained growth in emerging Asia. Left on the devices of the World Bank and the ADB, the populous nations of emerging Asia would not be able to complete their industrialisation; however, the proposed AIIB could galvanise in a decade, he said, adding: "The World Bank can loan some $50 billion per year, which barely covers the annual financing gap of a single country like Indonesia infrastructure requirements alone between 2015 and 2019. The new multilateral institution (AIIB) would help fund infrastructure projects in Asia" he added.
Faisal Afridi stated that South Asia needs to spend $2.5 trillion on infrastructure by 2020 to bring its power grids, roads and water supplies up to the standard needed to serve its growing population. Pakistan, he said requires investing up to 0.71 percent of its GDP in telecom every year, 1.23 percent of the GDP in transport and 0.83 percent of the GDP in irrigation. But all that requires financing which is higher than the country's total tax revenues, he added.
Faisal Afridi appreciated the proposed strategy of AIIB that is a combination of investment in infrastructure stock and implementing reforms that will allow the South Asia region to close its infrastructure gap. Other policy options proposed are to establish transparent and well-designed, legal, policy and regulatory framework, rehabilitation and maintenance of existing infrastructure, improving women's access to services and decentralising the centre's authority to local bodies, he added.
Faisal Afridi said that China proposed doubling the registered capital of the bank from $50 billion to $100 billion, with half from Beijing and the rest from the other founding members. The member nations include Myanmar, Vietnam, Laos, Cambodia, Vietnam and the Philippines. Among South Asian nations, India, Pakistan, Bangladesh and Nepal, he said. Although, he said, Pakistan is not a contributing member, in the sense that the country will not be contributing any funds to the bank's capital base, it will be able to draw resources from the bank once it becomes operational. This will give the country an alternative to the World Bank and Asian Development Bank that have been traditional partners for financing infrastructure initiatives here since at least the 1960s, he said.
"That's why the proposed AIIB is a great experiment to boost prosperity and hope not just in Asia but in all emerging and developing countries. It could provide a blueprint for emerging and developing economies in other world regions - even within advanced regions," said Afridi.
Faisal Afridi appreciated Pakistani government for taking a good decision regarding the membership of Bank, as the proposed regional infrastructure bank has great prospects and it is not just an effort to complement the existing multilateral institutions, a geopolitical power play, or an attempt at a race to the bottom; It is an initiative of the emerging Asia to augment the existing institutions, to deliver the promise of the region, and to offer an example for the rest of the world, including the advanced West, he concluded.
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