50 countries join China-led AIIB

Fifty countries including Bangladesh signed a groundbreaking agreement in Beijing on Monday to create the China-led Asian Infrastructure Investment Bank, with Dhaka being a founding member having a 0.67 per cent stake in the US$ 100 billion bank. The signing ceremony was held at Great Hall of the People in Beijing at 7am Bangladesh time (9am local time in China), as state minister for finance and planning MA Mannan signed the Articles of Agreement on behalf of Bangladesh, said Motiur Rahman, a joint secretary, ERD of the ministry of finance, who accompanied the minister in China. ‘A total of 50 countries including Bangladesh signed the agreement of the AIIB, as seven potential member countries at the last moment did not show up to sign the Asian infrastructure bank,’ Motiur told New Age on Monday from Beijing over phone. The birth of AIIB took place eight months after 22 countries signed the memorandum of understanding on the proposed multilateral bank. While the amount of subscription to own 0.67 per cent share stands at US$ 660.50 million for Bangladesh, the stakes have been determined for all 50 founding members on the basis of the sizes of their GDP. The country, however, has to pay only US$ 132.10 million as paid-up capital in five installments in next five years, a finance ministry official said. The paid-up capital of AIIB has been fixed at US$ 20 billion, according to the Articles of Agreement of the bank. Mannan last week told New Age the proposed multilateral bank would usher in new opportunities for the country as the much needed low-cost funds would boost the development activities in power, energy, roads and other physical infrastructures. ‘We consider the AIIB as a new window for cheap foreign funds as we suffer from the scarcity of foreign capital to develop and build our infrastructures,’ Mannan said. While all south Asian nations are the members of AIIB, India holds the largest share of 8.52 per cent in the bank. Being the sponsoring country, China’s share in the bank is 30.34 per cent, with South Korea and Indonesia having 3.80 per cent and 3.42 per cent stakes respectively. Besides Asian countries including Saudi Arabia and United Arab Emirates, large global economies such as Russia, New Zealand, Turkey, Brazil, France, Germany, Italy and UK have also signed the AoA of AIIB, sources said. ‘The paid-in capital will account for 20 per cent of the subscribed capital, in installments, in the form of convertible currencies and/or non-convertible currencies as the bank agrees,’ according to the negotiated AoA, a copy is obtained by New Age. ‘The regional members will take up not less than 70-75 per cent of the capital stock and non-regional members not more than 25-30 per cent. For regional members, GDP will be the basic parameter in determining share allocation, while taking into consideration the different contributing commitments that each country determines,’ the AoA added. The signing “is an embodiment of the concrete action and efforts made by all countries in the spirit of solidarity, openness, inclusion and cooperation”, Chinese President Xi Jinping said after the ceremony, according to an AFP report. Signalling China’s central role at the bank, he added: “Now we are willing to listen to your views and proposals.” The AIIB has been viewed by some as a rival to the World Bank and Asian Development Bank, and the United States and Japan — the world’s largest and third-largest economies, respectively — have notably declined to join. Earlier this month, former Federal Reserve Chairman Ben Bernanke rebuked US lawmakers for effectively encouraging the AIIB’s formation by blocking reforms giving developing nations a greater say in the IMF. The multilateral institution, seen as a rival to the Western-dominated World Bank and Asian Development Bank, was initially opposed by the United States but has attracted many prominent US allies including Britain, Germany, Australia and South Korea. Other founding members include most Asian nations and countries from the Middle East and South America. The AIIB is the brain child of influential Chinese think-tank China Centre for International Economic Exchanges, or CCIEE, which is helmed by former vice premiers and ambassadors, among others. The think-tank had proposed the creation of the bank in 2013 as an institution that balances China’s political and economic priorities, CCIEE officials said. ‘The AIIB has made a lot of progress so far in its preparatory work, but this is only the first step in a long road ahead,’ Chinese finance minister Lou Jiwei said in a commentary published on the website of the official People’s Daily newspaper on Thursday. Meanwhile, Reuters from BEIJING added : China will hold over a quarter of the votes in the new AIIB, its finance ministry said on Monday, giving it a veto in some key decisions despite Beijing insisting it will not have such powers. Seven – Denmark, Kuwait, Malaysia, Philippines, Holland and South Africa and Thailand – refrained from signing as they had not yet won domestic approval and are likely to do so later in the year. The ministry said China would have 30.34 percent of the voting rights in the bank. This would effectively give the country a veto on votes requiring a “super majority”, which need to be approved by 75 per cent of votes and two-thirds of all member countries. A super majority vote is needed to choose the president of the bank, provide funding outside the region and allocating the bank’s income, among other decisions. The United States, which initially cautioned nations against joining the AIIB, has expressed concern over how much influence China will wield in the new institution. China has maintained it will not have veto powers, unlike the World Bank where Washington has a limited veto. Xinhua news agency quoted China’s vice finance minister Shi Yaobin as saying that China did not seek a veto in the bank, describing its stake and voting share in the initial stage as a “natural result” of current rules. The ministry added that the initial stakes and voting rights of China and other founding members would be gradually diluted as other members joined. News Courtesy: www.newagebd.net