The Asian Infrastructure Investment Bank (AIIB) has announced details of its first financing, as it moves towards disbursing its first loan.
The China-backed development bank, which was this week strengthened by the addition of Switzerland to its member nations, will be involved in road projects in Pakistan, Kazakhstan and Tajikistan, and expects to lend US$1.4bn by June of this year.
The news comes two weeks after the AIIB signed a partnership agreement with the World Bank which will see the pair work together on project financing.
On signing the agreement Jin Liqun, the AIIB President, said: “Infrastructure projects are very large and it is not a very good idea for one bank to spend US$2bn or US$3bn on one project.”
The projects the AIIB has announced will see its early forays into financing projects be very much of a collaborative nature, as has been the suggestion in recent months.
It will partner with the EBRD in Tajikistan to fund a road in Dushanbe, reports the FT, with the World Bank and EBRD in Kazakhstan to help fund the Bakad Ring Road, according to reports, and will partner with the ADB and the Department for International Development (Dfid – a UK development financial institution [DFI]) in Pakistan.
In Pakistan, the ADB’s tender document has made it very clear that it is to be the lead bank.
The document reads: “ADB is the lead financing partner for the project and administers it on behalf of the other co-financiers… bidding shall be carried out in accordance with ADB’s procurement guidelines and procedures.”
“While more than 30 new countries are said to be ready to apply for AIIB membership, Taiwan has refused to entertain joining, for diplomatic reasons.”
The AIIB’s presence in Pakistan is no surprise: China has been aggressively pursuing infrastructure projects in the country, as part of the China-Pakistan Economic Corridor (CPEC). It is set to partner with the ADB on a 64km stretch of highway.
While more than 30 new countries are said to be ready to apply for AIIB membership, Taiwan has refused to entertain joining, for diplomatic reasons.
Taiwan had hoped to be a founder member but had its application rejected by Beijing last year. Now it has refused the terms of entry offered by the Chinese government.
The new Taiwanese government, which is perceived to be less Beijing-friendly than its predecessor, was outraged after Jin Liqun said that it would have to follow Hong Kong’s model, through which China’s finance ministry applies on its behalf.
China lays claim to Taiwan and does not recognise its independence. In response to the statement, Taiwan’s finance minister Chang Sheng-Ford said: “We cannot accept such a model. It hurts not only our national dignity, but also violates the principle of dignity.”
Bangladesh, meanwhile, has confirmed that it has approached the AIIB for funding for its power sector. The country is attempting to have full power for citizens by 2021.