What is the AIIB?
The Asian Infrastructure Investment Bank (AIIB) is a multilateral bank focused on infrastructure investment in Asia across a range of sectors, including transport, energy, water and communications. It is not a development bank in the style of the World Bank Group or the Asian Development Bank although it has been designed to complement the work of both organisations.
There is a large infrastructure financing gap in the Asian region – over the next decade, it is estimated that US$8 trillion of financing will be required to meet the needs of Asia. The AIIB, along with the work already being undertaken by the World Bank Group and Asian Development Bank, will help to fill this gap and leverage private sector funds for infrastructure projects.
The AIIB became operational on the 25 December 2015 and will have a total authorised capital of US$100 billion. The Board of the AIIB has approved the financing of a number of projects in Asia, encompassing energy, transport, urban development and other infrastructure sectors.
What is Australia’s involvement with the AIIB?
Australia was a founding member of the AIIB. On 29 June 2015, the then Treasurer Joe Hockey attended the signing ceremony of the AIIB Articles, the treaty establishing the AIIB, in Beijing, China. Australia ratified the Articles of Agreement, in time for the AIIB’s establishment on 25 December 2015. Australia was represented by then Assistant Minister to the Deputy Prime Minister, the Hon Michael McCormack MP, at the inaugural AIIB Board of Governors and Board of Directors meeting in Beijing on 16-18 January 2016. Australia’s Governor for the AIIB is the Treasurer.
Australia will contribute US$738 million paid-in capital to the AIIB over five years and will be the sixth largest shareholder. This investment will not come at the cost of other Government spending and will not directly impact on the Budget bottom line.
How will the AIIB affect Australia?
The AIIB will improve trade and investment opportunities across our region. It will also provide opportunities for Australian businesses to bid for contracts under the AIIB’s open procurement model.