The Asian Infrastructure Investment Bank (AIIB) is to finance two transport projects in Oman to the tune of US$301mn.
The China-backed development bank will lend US$265mn to a port project at Duqm and US$36mn towards Oman’s first railway system. The overarching aim is to help develop this section of the New Silk Road as part of China’s belt and road initiative.
The finance has already been approved, according to a statement from the AIIB, and marks the first venture into projects in the Gulf by the bank, which started lending at the beginning of 2016.
This will take its annual funding above the US$1bn mark for its first year in action.
“These are the bank’s first port and railway projects and help us to build our capacity in these important sectors. Our support will also help Oman prepare to develop a world-class railway network and manage it in a highly professional manner, as well as opening up other investment opportunities for the public and private sectors,” says the AIIB’s vice-president and chief investment officer, DJ Pandian.
The Port of Duqm is in Oman’s southeast, with coastlines on the Arabian Sea and Indian Ocean. It is viewed as a potential maritime hub for Middle Eastern trade, with its relative distance from the Strait of Hormuz marking it out as a potentially safer transport corridor.
Despite having what seemed to be a busy year – if headlines are used as a barometer – the total funding disbursed by the AIIB in 2016 falls well short of the expected US$15bn. In late 2015, President Jin Liqun said: “In regular years, given US$100bn in registered capital, I think every year I expect to do probably US$10bn to US$15bn, for the first five or six years.”
That said, it is early days. More than 30 countries have applied for new membership, in addition to the 57 founding members. The US was not among them, perhaps understandably, given the change in political direction in Washington.
However, Jin recently voiced his hope that a Donald Trump presidency might see a change in tack from the US, which declined the opportunity to join the AIIB and which also tried to discourage allies ranging from Australia to the UK and South Korea from joining the bank’s ranks.
Speaking to Chinese media in November, Jin said: “I have heard a certain senior official of the Obama administration speak good of the AIIB and after Donald Trump won, I was told that many in his team have an opinion that Obama was not right not to join the AIIB.”
Given Trump’s consistently strong rhetoric against China, the suggestion seems, at this point, fanciful.