The Asian Infrastructure Investment Bank (AIIB) is expected to start lending its member countries within mid-December next year.
The interest rate would be competitive as compared to the World Bank and International Monetary Fund (IMF), said State Minister for Finance MA Mannan, who signed a Memorandum of Understanding (MoU) with the China-backed new bank for Bangladesh. Twenty other Asian countries also signed the MoU in Beijing on Friday.
“We will not take loan from the bank if the interest rate is not moderate,” he told the Dhaka Tribune in an interview at his Planning Ministry office in Dhaka yesterday. “We will find a new source of global financial assistance which will be good for us.”
Besides, the World Bank’s financial assistance, further foreign assistance and aid will be required as the government mulls over turning every road into four lanes and constructing another Padma Bridge, added Mannan.
“We need big investment in power sector, river dredging and social sector development too.”
The AIIB is near our home and there is no barrier between clients and the bank like other multilateral lenders, he said.
The state minister said the interest rate of World Bank ranges between 1% and 0.75%.
Australia, Indonesia and South Korea skipped the launching ceremony of AIIB. The United States said it had concerns about the AIIB.
Mannan said despite the Chinese government invitation, they did not take part in the programme apparently because of the US influence. He added that Bangladesh is a founding member of the bank and will enjoy some extra facilities when the infrastructure bank kicks off.
The proposed bank, whose capital is said to be $100 billion, will provide Asian countries with an alternative source of funds.
The Chinese government including 20 other countries will provide 75% of the paid-up capital.
Most of the fund will come from the Chinese government while the rest from investment fund from different countries.
The investors will profit from the Chinese-backed infrastructure bank as well. As a member of the bank, Bangladesh will provide $2 billion to contribute to the AIIB’s paid-up capital, he said.
“Regarding the signing ceremony the state minister said on behalf of Bangladesh I signed the MoU first, and the Chinese finance minister took our opinions earlier.”
The plan to form such a bank was first announced by Chinese President Xi Jinping and Premier Li Keqiang during their visit to the South East Asian countries in October last year, he said.
Following the MoU, 20 members of AIIB selected its interim Secretary General Le GIM Chim who earlier worked in World Bank and also in multilateral agencies.
The head office of the Chinese infrastructure bank will be Beijing, said the state minister.
He adds that the Chinese president and finance minister at the ceremony informed AIIB members that the infrastructure bank is an all-inclusive financial institute and all of its members will have right to raise their voice.
The Chinese leaders said they are not against any countries or multilateral lenders and what they want is working together for development of the Asian countries.
The state minister said the bank will have human resources from its member countries that will also have hiring authorities.
Mannan said: “Look-east policy is good for our economy following the collapse of Soviet Russia and we want to come out of a unipolar world and so took the initiative to join the AIIB.”