Bangladesh has signed an initial instrument to join the proposed China-led Asian Infrastructure Investment Bank yesterday in Beijing to secure access to alternative sources of development funds.
State Minister for Finance MA Mannan inked a Memorandum of Understanding (MoU) on establishing the China-led Asian Infrastructure Investment Bank (AIIB) along with twenty other Asian countries, with three major countries skipping the event, according to agency reports.
Australia, Indonesia and South Korea skipped the launching ceremony as the United States said it had concerns about the new rival to the Western-dominated multilateral lenders.
The state minister for finance told local media: “We want to join the newly established multilateral and accordingly Bangladesh has signed the MoU.”
Bangladesh is a founding member of the bank and will enjoy some extra facilities when the infrastructure bank takes off, he added.
The proposed bank, whose approved capital is said to be US $100 billion, will provide Asian countries an alternative source of funds to the World Bank and the Asian Development Bank for infrastructure development.
The plan to form the bank was first announced by Chinese President Xi Jinping and Premier Li Keqiang during their visits to south-east Asian countries in October last year.
AB Mirza Azizul Islam, an adviser to a past caretaker government, yesterday told Dhaka Tribune: “The China–led Asian Infrastructure Investment Bank will be complimentary to existing global lenders – World Bank (WB) and International Monetary Fund (IMF) – for a developing country like Bangladesh.”
“We know the price of funds of the proposed bank will not be cheaper than at the WB, but AIIB offers an alternative source of funds for Bangladesh,” he said.
He said WB interest rates rarely topped 0.75 %.
In reply to a question on US reservations about the new multilateral agency, Mirza said: “I do not think there will be any retaliation from the US government or the World Bank because Bangladesh signed the MoU.”
China, which is keen to extend its influence in the region, has limited voting power over these existing banks despite being the world’s second-largest economy.
The AIIB, launched in Beijing at a ceremony attended by Chinese Finance Minister Lou Jiwei and delegates from 21 countries including India, Thailand and Malaysia, aims to give project loans to developing nations. China is set to be the largest shareholder with a stake of up to 50 percent.
Indonesia, where President Xi Jinping first spoke of the AIIB during an October visit last year, was not present and neither were South Korea nor Australia, according to agency reports.
Media reports claimed US Secretary of State John Kerry put pressure on Australia to stay out of the Chinese bank.
The Australian Financial Review said yesterday that Kerry had personally asked Australian Prime Minister Tony Abbott to keep Australia out of the AIIB.
“Australia has been under pressure from the US for some time to not become a founding member of the bank and it is understood Mr Kerry put the case directly to the prime minister when the pair met in Jakarta on Monday following the inauguration of Indonesian President Joko Widodo,” the paper said.
South Korea, one of Washington’s strongest diplomatic allies in Asia, has yet to say whether it will formally participate in the bank.