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.
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
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.
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.
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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