AIIB gathers for inaugural annual meeting

AIIB gathers for inaugural annual meeting

Jin Liqun, AIIB president

June 24, 2016 

Tom Mitchell in Beijing

China’s first multilateral development bank approved its inaugural projects on Friday ahead of a gathering of its founding shareholders for its annual meeting in Beijing this weekend.

The Asian Infrastructure Investment Bank, which formally opened its doors in January, is still in its “start-up” phase with an initial staff of just 50 people. “We’re all doing double duty, triple duty just to get the place going,” said Joachim von Amsberg, a World Bank veteran who signed on as the AIIB’s vice-president for policy and strategy.

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The AIIB’s board of directors approved four projects with total funding of $509m. The bank, which attracted unexpectedly strong interest from European countries, hopes to have more than 100 people on its payroll by the end of the year and be fully staffed by the end of 2018 with about 500 employees.

Partly because of the AIIB’s current manpower constraints, most of its initial projects will be ones already led by other institutions such as the World Bank, Asian Development Bank and European Bank for Reconstruction and Development.

Mr von Amsberg, a German national with 25 years’ experience at the World Bank, says such partners “are able to protect us and manage the risks”.

“But we will also get involved in the implementation of their projects,” he adds. “It’s learning by doing.”

These initial “co-finance” projects include a slum redevelopment in Indonesia with the World Bank, an ADB highway in Pakistan and an EBRD road connecting Tajikistan and Uzbekistan.

The AIIB will also approve its first solo development project in Bangladesh, where it will help fund a new energy grid bringing electricity to about 12.5m people.

The AIIB’s president, Jin Liqun, has promised his bank will adhere to the highest international development standards, countering initial US fears about the bank’s practices. The Obama administration has so far refrained from joining the AIIB even as many traditional US allies, most notably the UK, have signed up in droves.

The establishment of a Beijing-led multilateral development bank marks a new departure for the Chinese government, which has previously funnelled loans worth hundreds of billions of dollars to developing countries through wholly owned institutions such as China Development Bank and the Export-Import Bank of China.

CDB in particular is an opaque institution whose project funding is often tied to natural resources — a strategy that has got it into trouble in countries such as Venezuela.

The AIIB, in contrast, is trying to be a model of transparency while avoiding any controversy. It chose to support an electricity distribution scheme for its first solo development project — rather than power generation — in part because the latter can be environmentally controversial depending on the fuel used.

This article has been amended to correct the figures in AIIB’s total funding for four projects

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