Asian Infrastructure Investment Bank (AIIB): Skepticism and Opportunities

Now that the cutoff date to sign up for the Asian Infrastructure Investment Bank (AIIB) has come, there is a lot of talk about why some countries chose not to participate and also what the AIIB has to offer to its members and the world. The last two countries to seize the membership opportunities were Taiwan and Norway, just days before the deadline. The plans for the AIIB are to help finance construction of roads, ports, railways, and other infrastructure projects throughout Asia.

It was a bit shocking to many that Japan and the United States opted out of being members of the organization. Both countries led on that concern over adequate environmental, labor, and social safeguards were at the heart of their disinterest. The U.S. has expressed concern over the AIIB being in competition with other institutions including the International Monetary Fund (IMF), World Bank, and the Asian Development Bank (ADB). Concerns also arise around the AIIB increasing China’s influence in the region. Many believe however, that the AIIB is fulfilling a role these other financial institutions have not put a large focus on.  Many of the other institutions center on poverty reduction, while the AIIB will be dedicated to infrastructure in Asia. It seems there will be plenty of room for the AIIB to cooperate with these other organizations.

There are many attractions for countries to join the AIIB. The biggest enticement being the immense business opportunities in Asia, as infrastructure development plays a large role in almost every country and having additional funding will increase infrastructure business and jobs in many nations. Also, AIIB is a part of the new “Silk Road”, with a goal to deepen trade and investments in Asia and around the world. Hopefully, additional outcomes will include stronger governmental ties, better joint understandings, and the encouragement of long-term stability in the region. There are also specific benefits for individual countries to take part in the AIIB. For Russia, it is a way to form investment and business in Asia while its economy is fraught with international sanctions. Furthermore, an improved regional infrastructure system will generate economic collaboration and integration in Asia, bettering the region as a whole.

Hopefully over the next year the world will start to see the AIIB take action and see what the real outcomes of the institution will be. Even with skepticism from certain countries, it seems that there is great opportunity for the AIIB to better the Asian region’s infrastructure, possibly drawing in more international business and investments. Make sure to stay up to date on this matter and other international business affairs on the globalEDGE website and blog.