Recent development
The Asian Infrastructure Investment Bank ("AIIB"), a new multilateral development bank established after China proposed the initiative in 2013, officially became operational on January 16, 2016, following the effective date of AIIB's Articles of Agreement being ratified by 10 member states and the board of governors' meeting. Located in Beijing, China, AIIB's target is a new multilateral financial institution designed to provide financial support for infrastructure development and regional connectivity in Asia.
Structure
Formed by 57 countries, including China, Britain, Germany, Australia, South Korea and Turkey, AIIB's total capital commitment is USD 100 billion. The United States and Japan did not join the AIIB. Thirty-seven of the countries are from the Asia-Pacific region, while the 20 remaining include European countries, such as Germany, France and the United Kingdom, and Brazil and South Africa. As one of the founding regional members of AIIB, Turkey will have access to AIIB funding for infrastructure investments.
AIIB's highest decision-making body is the board of governors, with each member state holding one seat. AIIB's day-to-day operations will be carried out by the board of directors, composed of 12 governors — nine from the Asia-Pacific region and three from outside the region. The governors elected Jin Liqun as the first president of the bank as well as the board of directors.
Focus
AIIB will focus on infrastructure, financing roads, railways and power grids across Asia. This will complement projects of the World Bank and Asian Development Bank, where it is estimated that an extra USD 8 trillion is needed for infrastructure investment. It will also focus on cooperation and partnership with other multilateral and bilateral development institutions, as emphasized by Mr. Liquin in his opening speech, by acknowledging the valuable support of multilateral development banks, particularly the World Bank, Asian Development Bank, European Bank for Reconstruction and Development, and the European Investment Bank.
AIIB's procurement will not be limited to member countries, meaning that non member states, such as the United States, Japan and Canada, can also participate in AIIB's tenders and other activities. The board of directors is currently discussing AIIB's environmental and social policy framework, which is expected to be approved by late February.
Conclusion
AIIB will invest in the economic development and infrastructure of Asia under China's leadership, joined by other countries throughout the world. A steady wave of infrastructure investment may be triggered by the introduction of a key multilateral development bank in a region where infrastructure investment is needed. Allowing non-member states' companies to undertake projects, AIIB targets to be a major international development bank. Considering the interest of other multilateral development banks in Turkey in energy and infrastructure investments, AIIB will provide a new source of financing for projects in Turkey.
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