The Asian Infrastructure Investment Bank, known as the AIIB, is celebrating its fifth anniversary. Today, the organization has doubled the number of members it had when it launched in Beijing back in 2016, making it the second largest of all multilateral banks. In the face of new global challenges, not least of all COVID-19, the AIIB is currently undergoing a transformation. Feng Yilei has more.
The Asian Infrastructure Investment Bank is re-thinking its strategy, from financing traditional infrastructure, to looking ahead to the future.
The international development bank has identified key emerging infrastructure trends that will drive the future of investment in previously overlooked areas.
The new focus? Infrastructure that is green and human-centred, with an eye on technology while enhancing connectivity.
The shift takes place in the context of COVID-19, which experts say has exposed weaknesses in infrastructure of many economies.
JIN LIQUN President of AIIB “At this juncture, it is important to point out that efforts to foster our health system as well as address climate change can no longer be dealt with in silence. We need to promote the intricate emerging pattern of the relationship between climate and health care problems. Rebooting the global economy will require that we no longer tackle challenges in isolation.”
The AIIB’s plans are laid out in its “Next-10-year Corporate Strategy” which establishes clear priorities and ambitious targets in its overall share of financing-50 percent for climate action by 2025, 25 to 30 percent for cross-border connectivity by 2030, and 50 percent for private sector operations by 2030.
In the medium-to-long term, the bank’s next chapter includes not just expanding into social infrastructure, but also ramping up investment in digital infrastructure, especially in less-developed regions.
JIN LIQUN President of AIIB “New infrastructure development boosted by new technologies will bring for immediate benefits and pay off in the long term. Global trade will eventually open up, and those countries who invest smartly would be ready to capitalize on those opportunities. Indeed, there will be, in my view, and overhaul of the existing structure to meet the needs of the digital era.”
As global policy makers struggle with the current global health crisis and its immediate aftermath, experts say it is imperative for multilateral development banks, such as the AIIB, to work with the private sector to mobilize much needed investment.
They say a key challenge is to leverage more international capital from the private sector or commercial banks that eye returns.
JIN LIQUN President of AIIB “To a certain extent, it’s not so easy to find common ground, but it’s possible. Private sector investors may not necessarily look at the highest returns when they know that by working with MDBs, actually, they have safety of their resources. And also with enhanced responsibility, they would love to work with MDBs.”
FENG YILEI Beijing “Over the past half a decade, the president of the AIIB says he has witnessed the progress in terms of how development bank operates, including its policies, regulations, staffing and institutional environment.”
Challenges brought about by the pandemic have accelerated change in the overall development of multilateral development banks. The AIIB says it has gained critical experience and the opportunity to further evolve its business model, to play a central role in the stability of global finance. Feng Yilei, CGTN, Beijing.