Business / Economy

AIIB vows to engage private sector across world in Asia's infrastructure investment

(Xinhua) Updated: 2015-09-21 13:53

SINGAPORE - Jin Liqun, president-designate of the Asian Infrastructure Investment Bank (AIIB), said on Saturday that the AIIB is a very good combination of strong features of public sector companies and private sector companies, and it would do more to engage private sector in infrastructure investment.

Jin made the remarks at a press conference after the conclusion of the Singapore Summit, which was held on Friday and Saturday. Talking about how to engage private sector in infrastructure investment in Asia, Jin said the AIIB would act as a platform for the private sector companies to invest in infrastructure facilities.

"Normally, infrastructure investment would have long gestation period, and there're also huge risks. So when we step in, it would provide a lot of comfort to the private sectors when they work with local governments in this region. We can also help with creating bankable projects for private sector to participate in."

While emphasizing that the AIIB would not limit to private sector within this region but across the world, Jin said the joining of private sector companies can also contribute as "they' re normally cost-effective, they look at the profitability, and have much less bureaucracy".

The AIIB, which has 57 prospective founding countries, will have authorized capital of $100 billion. Asian countries will contribute up to 75 percent of the total capital and be allocated a share of the quota based on their economic size.

The allocation of capital reflects the nature of AIIB, which focuses on infrastructure investment in countries within the region. And some of these countries, particularly the low-income countries, have backlog in infrastructure projects, but lack of finance. In response, Jin said the AIIB would not "sidestep low-income countries".

"Because of the sustainability issues, it may not be feasible for a number of low-income countries to borrow from the market, World Bank and ADB. When we step in, we can work with the private sector without adding the public debt to the sovereign government, " Jin explained.

"We should cover both relatively-developed emerging economies and low-income countries, so it should be a balanced program and that are, in my view, very much important for this bank to be conscious of the need of all this countries and to meet the needs of low-income developing countries. Because this is not a purely commercial institution, we cannot simply put the money where we can get the highest returns."

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