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Statement by AIIB Governor of Singapore, Finance Minister Heng Swee Keat, At The AIIB Inaugural Board of Governors' Meeting (Session Two)

16 Jan 2016
Dear colleagues, on behalf of the Singapore delegation, I thank the Government of the People’s Republic of China for hosting the inaugural Asian Infrastructure Investment Bank (AIIB) Meetings and for your warm hospitality. I also congratulate China for your leadership and all founding members for the significant milestone that we have achieved together. The establishment of the AIIB marks a significant milestone in regional and global cooperation in development. The process of establishing the AIIB has been open and inclusive, and has successfully led to 57 countries signing the Articles of Agreement.

2. Infrastructure is critical in spurring economic growth, and the scale of infrastructure needs in Asia is immense. However, infrastructure investments are by nature lumpy and costly, and yield positive returns only over many years. Full private sector funding of infrastructure projects is hence difficult, given the long project duration and complex risks. Fiscal constraints also limit public sector funding. Multilateral financial institutions like the AIIB thus play a unique role in filling the infrastructure gap that cannot be fully met by the public sector or the private sector. 

3. The AIIB is a significant initiative in advancing infrastructure development and connectivity in the region, complementing other regional initiatives such as the ‘One Belt One Road’. To maximise the impact of the Bank in fostering economic and social development in Asia, I would like to make four suggestions.
4. First, the AIIB could help to strengthen the capabilities of policymakers in the region, so that they are better able to structure projects to make this viable and to maximise the economic and social impact that are bankable. Public officials need to be better equipped to manage complex projects and project risks. The World Bank-Singapore Hub is already engaged in such capacity-building efforts for the region and beyond. The AIIB could play a key role in reaching out to even more governments to provide technical assistance and practical advice.   

5. Second, the AIIB could make concerted efforts to leverage its financing and crowd in funding from the private sector as co-investments. The benefits of private sector involvement go beyond the mere provision of funds. The private sector can also contribute much-valued market expertise and proper financial discipline to infrastructure projects. 

6. Third, the AIIB could contribute to strengthening and mainstreaming the existing infrastructure financing landscape. We encourage the AIIB to explore innovative mechanisms to spur the development of infrastructure as an asset class. Growing infrastructure as an asset class requires capital market scalability, transparent financial markets, and liquidity. AIIB can play a part in specific initiatives such as (i) the proper structuring of project loans to support transferability amongst different investors across the life cycle of infrastructure projects, (ii) standardisation of project and project finance documentation and terms, and (iii) improved transparency for project finance loans. 

7. Finally, the AIIB could actively collaborate with other multilateral institutions such as the World Bank and Asian Development Bank to promote sustained growth in Asia and set high standards in governance, procurement, environmental and social safeguards.

8. Let me conclude by once again affirming Singapore’s commitment to deepen cooperation with members and with the AIIB, to strengthen the Bank as a first-rate multilateral financial institution. Finally, let me congratulate President Jin Liqun on your appointment and to wish the staff of the AIIB all the very best. I am confident that the AIIB is well-placed to make impactful, positive contributions in this region to build better lives for our people. 

9. Thank you very much.