Asian Infrastructure Investment Bank13 Jul 2015
Parliamentary Questions by Mr Thomas Chua Kee Seng:
To ask the Deputy Prime Minister and Minister for Finance (a) what are the considerations for Singapore to be a founding member of the Asian Infrastructure Investment Bank (AIIB); (b) how will Singapore contribute to the capital of AIIB; and (c) what are the risks and opportunities for Singapore companies arising from Singapore's membership in AIIB.
To ask the Deputy Prime Minister and Minister for Finance what is the difference between our membership in the Asian Infrastructure Investment Bank and our existing membership in the Asian Development Bank given that both are multi-lateral financial institutions focused on infrastructure development in Asia.
Reply by Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam:
The scale of infrastructure needs in Asia is large, with some US$8 trillion needed by 2020. As part of the region, Singapore views the Asian Infrastructure Investment Bank, or the AIIB, as a timely initiative that can help close this infrastructure gap.
Singapore has itself benefitted from the assistance of institutions like the World Bank and the Asian Development Bank. In 1966, we joined these Banks to access additional sources of loans. While Singapore is no longer a borrowing country, we should play our part in supporting regional connectivity and growth, which will also benefit the Singapore economy.
Singapore is one of the first few countries to be involved in the establishment of the AIIB. We are working with other founding members to build up the AIIB as a first-class international financial institution, with strong governance and high standards. Singapore played an active role in hosting and co-chairing the negotiations of the AIIB Articles of Agreement here, which were concluded in May this year.
Singapore, as a global financial centre and a base for major infrastructure companies, is well placed to collaborate with the AIIB and facilitate new opportunities for businesses here. In fact, the World Bank partners many Singapore-based companies along the infrastructure value chain, and uses Singapore as a base from which to provide urban and infrastructure solutions to countries regionally and globally. With the AIIB, companies can similarly bid for infrastructure projects, or provide advisory services for project structuring, among other opportunities. While businesses have to conduct their risk assessment for deals with the AIIB, we expect that the risk would be comparable to that of partnerships with other multilateral development institutions.
The AIIB will start with a total authorised capital of US$100 billion. The Singapore Government plans to subscribe to US$250 million, or 0.25%, of the AIIB’s total authorised capital. Of this US$250 million, 20% or US$50 million is to be paid-in over five annual installments, in other words US$10 million a year. The other 80% or US$200 million of our capital subscription does not need to be paid in, except when called by the AIIB in extraordinary circumstances. This is similar to the practice in other multilateral financial institutions.
The AIIB will focus primarily on infrastructure, while the World Bank and the Asian Development Bank have additional priorities such as education and health. While Singapore is not a major donor country, we have an active partnership with these international institutions to promote regional and global growth.
There is good support for the AIIB, both within and outside the region. 50 countries signed the AIIB Articles of Agreement last month, including our regional partners among ASEAN member states and major European economies such as France, Germany and the United Kingdom. The AIIB Bill, tabled for first reading in Parliament today, will provide for Singapore to become a member of the AIIB.