Brunei reiterated its presence in global economic affairs by signing onto the Chinese-backed Asian Infrastructure Investment Bank (AIIB) in 2015.
The AIIB is a multilateral development bank (MDB) based in Beijing which dedicates its resources to developing Asia’s infrastructure and interconnec- tivity, complementing and cooperating with existing MDBs.
“AIIB’s core mission is to promote Asia’s social and economic development by investing in projects that will connect people, services and markets,” said Jin Liqun, AIIB’s President.
The AIIB is the first Asian-based international bank to operate independently from the Western-dominated Bretton Woods institutions, the International Monetary Fund (IMF) and the World Bank.
AIIB has implemented strong policies on govern- ance, accountability, finance, procurement and environmental and social frameworks, benefitting from lessons and experiences learnt from existing MDBs and the private sector.
As one of the 57 signatory countries of what is regarded as one of China’s biggest foreign policy and economic initiatives, Brunei’s participation in the bank will undoubtedly offer a golden opportunity for its local private sector companies to not just con-
tribute, but rather invest in Brunei’s infrastructure development.
In 2016, AIIB approved loans of USD1.73 billion to support nine infrastructure projects in seven coun- tries, including Pakistan, Bangladesh, Tajikistan, Indonesia, Myanmar, Azerbaijan and Oman. “In 2016, we worked hard to be seen as a trusted part- ner by sovereign governments, private financiers and other multilateral development banks,” said President Jin.
“We believe only by working collaboratively can we hope to address the growing need for transportation networks, urban development, clean water supplies and low-carbon power within Asia.”
Year 2017, however, prioritised green infrastructure investments and promoted energy efficiency, renew- ables, clean transport and other major projects which helped address global warming.
The Beijing Air Quality Improvement and Coal Replacement Project was one, replacing coal with natural gas in rural villages on the city’s outskirts. Once completed, 216,751 rural households will have gas service connections, reducing coal consumption by around 650,000 tons annually.
AIIB received three triple-A credit ratings from credit rating businesses Moody’s Investors Service, Fitch
Ratings and S&P Global Ratings in 2017. Moody’s cited, “the strength of AIIB’s governance frame- works, including its policies on risk management, capital adequacy, and liquidity,” as reasons for the high rating.
Fitch’s findings were based on, “it’s existing and expected intrinsic strengths… AIIB has been endowed with a substantial capital based which, in Fitch’s view, will support the projected rapid expan- sion in lending; exposure to risk will be mitigated by a comprehensive set of policies and by high quality governance. AIIB enjoys an excellent level of liquid- ity and should benefit from easy access to capital markets.”
S&P, meanwhile, stated, “The ratings reflect our opinion that over the next three-to-five years, AIIB will establish a track record and significantly enhance its operational setup, supporting our assessment of its very strong business profile and its extremely strong financial profile.”
In April 2017, the AIIB and the World Bank signed a memorandum of understanding to strengthen their cooperation and knowledge sharing. “Signing this memorandum of understanding fits into our vision of a new kind of internationalism,” said President Jin. “It deepens our relationship with the World Bank Group and sets up the mechanisms through which we can more easily collaborate and share information. We place a high value on our partnerships because by working together, we greatly increase our potential for positive outcomes in Asia.”
AIIB was one of several MDBs present at the Global Infrastructure Forum 2017, which brought together potential investors, representatives of the United Nations and the G20, along with the heads of the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter- American Development Bank, Inter-American Investment Corporation, International Finance Corporation, Islamic Development Bank, New Development Bank and the World Bank.
It is hoped that this deeper collaboration and encouragement of private sector investment can create win-win scenarios whereby investors could earn better long-term investment returns, while developing countries receive the expertise and investment they need.
Historically, members of MDBs have been able to take advantage of the broad range of financing products deployed, their cutting edge knowledge, convening power and leverage public and private financing. However, there remain no slated major projects in Brunei on AIIB’s list of approved projects.
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