China-led Bank “To Fill Funding Gap, But Hurdles Remain”

The Straits Times

27 April 2015

THE China-led Asian Infrastructure Investment Bank (AIIB) will fill a dire need for funding in the region, but a range of issues still have to be addressed, say industry experts.

These include clarity on the bank’s scope, its ability to garner support from diverse participating members and the establishment of a strong governance framework, said academics, bankers and other infrastructure players.

Their comments come after Prime Minister Lee Hsien Loong told the media at the Asia-Africa Summit in Jakarta last Wednesday that the AIIB is a “step in the right direction” amid the ongoing search for a new global economic order.

The AIIB is envisioned as a multi-lateral lender that could finance billions of dollars’ worth of large-scale infrastructure projects across Asia.

Singapore is one of 57 prospective founding members of the AIIB, along with the likes of Germany, India, France, Britain and South Korea.

… Dr Kaewkamol Pitakdumrongkit, assistant professor at the Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies, said that countries will have different interests and ideas on how the AIIB should operate.

“For example, what kinds of conditionalities to be attached to the loan? How is lending activated, by voting or consensus? If by voting, how many votes are needed to activate lending? How are the votes allocated among the member parties? These are some issues that they need to work out, which could delay an agreement,” she said.

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