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ADB and AIIB shake hands

The Asian Development Bank sees its collaboration with the Chinese-led multilateral lender as potentially resembling the way the EIB and the EBRD work together in Europe.

 

Takehiko Nakao and Liqun Jin, respectively president of the Asian Development Bank (ADB) and secretary general of the multilateral interim secretariat of the Asian Infrastructure Investment Bank (AIIB), used the ADB’s 48th annual meeting on Friday to announce their commitment to collaborate.

Although Nakao’s announcement appears as a noteworthy shift from last year – when the bank expressed concerns over the AIIB’s governance standards and initially refused to side with it – the news was received with enthusiasm by ADB’s East Asia head of private sector infrastructure finance Hisaka Kimura, who portrayed last year’s press reports as a “misunderstanding”.

“We always knew that we would work with them. The AIIB is bringing a new approach to infrastructure financing so it’s very exciting for us. We have been looking forward to working with the AIIB from day one,” said Kimura in a phone conversation with Infrastructure Investor today.

Future collaboration includes co-financing as well as broader joint initiatives as part of ADB’s “commitment to working together [with the AIIB] for Asia,” announced Nakao on Friday.

Both representatives used their addresses to underline the large infrastructure gap in the region, the critical role of infrastructure in supporting sustainable development and poverty reduction, and the importance of safeguard policies on environmental and social impacts of projects.

They agreed to continue sharing necessary information and further discuss concrete options for collaboration.

“The AIIB is targeting to start on its project financing by the end of the year. I haven’t been approached yet by the AIIB but I believe they are very busy finalising the bank’s charter,” added Kimura.

“We are looking forward to collaborating on projects falling under the new Silk Road project, with enhanced connectivity through marine and land infrastructure like ports and trains. By connectivity, we don’t only anticipate logistics and transportation at the service of trade, but I suspect the AIIB is also exploring soft infrastructure.”

Kimura, who has previously worked with the European Investment Bank (EIB), sees the two banks potentially co-operating in the same way as the EIB and the European Bank for Reconstruction and Development (EBRD) have been doing for a long time.

Just last week, the AIIB admitted its 56th prospect member, North Korea, who had been rebuffed a few months ago on its first attempt to join.

The bank, which will be re-investing China’s huge foreign exchange reserves into projects to build roads, bridges, mobile phone towers across the Asian continent, was created in November last year with the signature of 21 country representatives.

Beijing has already committed to providing at least $50bn of the $100bn capital needed to jump start the initiative.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totalled $22.9 billion, including co-financing of $9.2 billion.