Asia Infrastructure Investment Bank(AIIB)
Chinese President Xi Jinping and Premier Li
Keqiang announced the AIIB initiative during their respective visits to
Southeast Asian countries in October 2013. The AIIB was envisaged "to
promote interconnectivity and economic integration in the region" and
"cooperate with existing multilateral development banks". Following
this announcement, bilateral and multilateral discussions and consultations
commenced on core principles and key elements for establishing the Bank.
In October 2014, representatives from 22
countries signed a Memorandum of Understanding (MOU) to establish the AIIB and
Beijing was selected to host Bank headquarters. Mr. Jin Liqun was appointed as
the Secretary General of the Multilateral Interim Secretariat. The Secretariat
is tasked to perform technical preparations for establishing the AIIB and to
provide technical support and services for the Chief Negotiators' Meetings.
The Prospective Founding Members established
the Chief Negotiators Meeting (CNM) as the forum for PFMs to negotiate and
agree on AIIB's Articles of Agreement (AOA) and other issues related to the
Bank's establishment. The first CNM was held in November 2014 in Kunming,
China. A second CNM in Mumbai, India (January 2015) launched discussions on the
draft AOA. It was followed by a third CNM in Almaty, Kazakhstan in March 2015.
By the deadline of March 31st for submission
of membership applications, the Prospective Founding Members had increased to
57, and the 4th CNM was organized in Beijing in April 2015. The final text of
the AOA was adopted by the 5th CNM on May 22, 2015 in Singapore. The AOA will
be open for signature by PFMs from June 29, 2015 through December 31, 2015.
Full information
1. What is the purpose of the AIIB?
The AIIB will be a new multilateral
development bank (MDB) designed to provide financial support for infrastructure
development and regional connectivity in Asia. The purpose of the Bank is to:
(i) foster sustainable economic development, create wealth and improve
infrastructure connectivity in Asia by investing in infrastructure and other
productive sectors; and (ii) promote regional cooperation and partnership in
addressing development challenges by working in close collaboration with other
multilateral and bilateral development institutions.
2. What are the functions of the AIIB?
The AIIB has broad functions, similar to
other MDBs. Under its Articles of Agreement, the AIIB's functions
include: (i) promoting public and private investment in the Asia region for
development, in particular for infrastructure and other productive sectors;
(ii) utilizing the resources at its disposal for financing such development in
the region; and (iii) encouraging private investment that contributes to
economic development in the Asia region, in particular in infrastructure and
other productive sectors, and supplementing private investment when private
capital is not available on reasonable terms and conditions.
3. Who may become a member of AIIB?
Membership in AIIB is open to members of the
International Bank for Reconstruction and Development or the Asian Development
Bank. The Board of Governors is responsible for decisions on new members.
Regional members are those located within
areas classified as Asia and Oceania by the United Nations (see http://unstats.un.org/unsd/methods/m49/m49regin.htm),
except as otherwise decided by the Board of Governors.
4. Who are the Founding Members of AIIB?
Fifty-seven Prospective Founding
Members(PFMs) are listed in Schedule A of the AOA: Australia, Austria,
Azerbaijan, Bangladesh, Brazil, Brunei Darussalam, Cambodia, China, Denmark,
Egypt, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Iran, Israel,
Italy, Jordan, Kazakhstan, Korea, Kuwait, Kyrgyz Republic, Lao PDR, Luxembourg,
Malaysia, Maldives, Malta, Mongolia, Myanmar, Nepal, Netherlands, New Zealand,
Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Russia, Saudi
Arabia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland,
Tajikistan, Thailand, Turkey, the United Arab Emirates, the United Kingdom,
Uzbekistan, and Vietnam.
Founding Members of AIIB will be those PFMs
that sign the AOA before December 31, 2015 and fulfil all other conditions of
membership -- deposit of instrument of ratification, acceptance or approval and
payment of the initial subscription -- before December 31, 2016or if necessary,
until such later date as may be decided by the Board of Governors. Members
are listed as regional and non-regional in Schedule A of the AOA.
After AIIB is formally established, others
may apply for AIIB membership. The process for admission of new (non-founding)
members will be finalized after the Board of Governors is in place.
5. Who may receive financing from the AIIB?
Recipients of AIIB financing may include
member countries or agencies and entities or enterprises in member territories
as well as international or regional agencies or entities concerned with the
economic development of the region. As the functions and purpose of the Bank
focus on the economic development of the Asia region, the Bank could be
authorized to provide financing to recipients located outside the region that
contributes to the economic development of the Asia region.
6. Where will the Bank be located? Will it have
country or regional offices?
The principal office of the AIIB will be in
Beijing, China. The AIIB may establish offices or agencies elsewhere.
THE ARTICLES OF AGREEMENT &THE CHIEF
NEGOTIATORS' REPORT
7. What are the Articles of Agreement (AOA) of
the AIIB?
The AOA is the charter of the AIIB, the
treatyestablishing AIIB as an international organization.
The AOA will be available on the Secretariat
website, www.aiib.org.
8. What is the Chief Negotiators' Report (CNR)?
During the discussions on the draft AOA, the
Chief Negotiators agreed that certain formulations in the AOA text represented
general understandings which needed to be recorded. The Chief Negotiators'
Report summarizes these understandings, for future reference in interpreting
the AOA.
It will be available on the Secretariat
website, together with the AOA.
9. When will the AOA be signed?
The AOA was opened for signature at a
Ceremony on June 29, 2015 in Beijing, and will remain open for signature by
PFMs until December 31, 2015.
10. What is the deadline for ratification of
the AOA?
To become AIIB Founding Members, PFMs that
sign the AOA will have until December 31, 2016 to provide their ratification,
acceptance or approval of the AOA, unless the Board of Governors decides to
extend the date.
11. When will the AOA enter into force?
The AOA will enter into force when at least
10 signatories, with initial subscriptions in Schedule A that total not
less than 50 % of total subscriptions, have deposited their instruments of
ratification, acceptance or approval.
It is expected that the AOA will enter into
force by the end of the calendar year 2015.
Once the AOA enters into force, the inaugural
meeting of the Board of Governors will be convened.
At its inaugural meeting, the Board of
Governors will, among other matters: elect the President; elect the Board of
Directors; determine the date that the AIIB will commence operations; and make
other arrangements as necessary to commence AIIB operations.
GOVERNANCE ARRANGEMENTS:
12. What is the governance structure of the
AIIB?
The AIIB will have a Board of Governors, a
Board of Directors, a President, one or more Vice-Presidents, and such other
officers and staff as may be considered necessary.
13. What is the composition of the Board of
Governors?
Each member of the AIIB will appoint a
Governor to represent it on the Board of Governors. All powers of the AIIB are
vested in the Board of Governors. The Board of Governors can delegate any of
its powers to the Board of Directors except certain reserved powers. The Board
of Governors meets annually.
14. What is the composition of the Board of
Directors?
The AIIB will have 12 Directors on its Board
of Directors: nine elected by regional members and three elected by
non-regional members. Each Director will have an Alternate Director, and
Directors elected by more than a specified number of members may appoint an
additional Alternate Director. The Board of Directors will function on a
non-resident basis, except as otherwise decided by the Board of Governors. The
Board of Directors is expected to meet regularly in physical meetings, and to
have electronic meetings as needed at other times.
The Board of Directors will be responsible
for the direction of the AIIB's general operations and, for this purpose, will
exercise all the powers delegated to them by the Board of Governors.
15. How is voting power in the AIIB calculated?
Members' voting power is the sum of their
Basic Votes, Share Votes and, where applicable, Founding Member Votes.
Basic Votes for all members constitute 12 percent of the total number of votes
(Basic Votes, Share Votes and Founding Member Votes) at any time; an equal
number of Basic Votes is allocated to each member. For Share Votes, each member
has one vote for each share of capital stock held. Each Founding Member will
also be allocated six hundred (600) Founding Member votes.
16. How will the President be elected?
The President of the AIIB will be elected by
the Board of Governors through an open, transparent and merit-based process.
The President will be a national of a regional member country and may serve up
to two 5-year terms.
17. What are the powers of the President?
The President will conduct the current
business of the Bank under the direction of the Board of Directors. The
President will be Chairman of the Board of Directors but will have no vote,
except a deciding vote in case of an equal division.
18. How will Vice Presidents be selected?
Vice-Presidents will be appointed by the
Board of Directors on the recommendation of the President, on the basis of an
open, transparent and merit-based process.
19. How will the Board of Directors exercise
oversight?
The Board of Directors will supervise the
management and the operation of the Bank on a regular basis and will establish
an oversight mechanism for that purpose in line with the principles of
transparency, openness, independence and accountability. The mechanism is
expected to address such areas as audit, evaluation, fraud and corruption,
project complaints and staff grievances.
CAPITAL, FINANCES & OPERATIONS:
20. What will be AIIB's capital base?
The authorized capital stock of the AIIB will
be US$100 billion, divided into 1 million shares having a par value of
US$100,000 each. The original authorized capital stock will be divided into 20%
paid-in shares and 80% callable shares. The authorized capital stock of the
Bank may be increased by the Board of Governors.
21. How will shares of capital stock be
allocated?
As a regional bank, the AIIB's regional
members will hold the majority of capital stock—a minimum 75% except as
otherwise agreed by the Board of Governors. This shareholding arrangement
reflects the commitment and ownership of regional members. Schedule A of the
AOA shows unallocated shares totaling about US$1.6 billion for regional members
and US$234 million for non-regional members in anticipation of additional
members joining each category. These numbers may change depending on actual
subscriptions by Prospective Founding Members. Unallocated shares would be
available for subscription by new or existing members as determined by the
Board of Governors.
The basic parameter for allocation of capital
stock to members is the relative share of the global economy of members (based
on GDP) within the regional and non-regional groupings, with the understanding
that the GDP share is indicative only for non-regional members.
22. What are AIIB's key financial instruments?
The AIIB will focus principally on financing
specific projects or specific investment programs, equity investments; and
guarantees. It may: (i) make, co-finance or participate in direct loans; (ii)
invest in the equity capital of an institution or enterprise; (iii) guarantee
loans for economic development; (iv) deploy Special Funds resources in
accordance with the agreements determining their use; or (vi) provide other
types of financing as may be determined by the Board of Governors.
Special Funds would be donor funds that are given to the Bank for use
consistent with its purpose and functions.
The Bank may also provide technical advice
and assistance and other similar forms of assistance consistent with the AIIB's
purpose and functions.
23. How will the AIIB raise its capital?
In addition to the capital subscribed by
members, the AIIB will raise funds primarily through the issuance of bonds in
financial markets as well as through the inter-bank market transactions and
other financial instruments. The AIIB may raise funds, through borrowing or
other means, in member countries or elsewhere, in accordance with relevant
legal provisions. The AIIB will seek to obtain the highest credit rating
possible to facilitate borrowing in capital markets.
24. Will AIIB administer trust funds?
The AIIB may establish and administer trust
funds, provided by third parties, that are consistent with AIIB's the purpose
and functions of the AIIB. A trust fund framework would be approved by the AIIB
Board of Governors.
25. How will the AIIB address environmental and
social impacts and risks?
The Board of Directors will establish the
policies of the Bank. The Bank will ensure that each of its operations
complies with the Bank's operational and financial policies. These policies
would be based on international best practices and would include, among others,
environmental and social frameworks, disclosure, procurement, debt
sustainability, and operations in disputed areas. The draft environmental and
social policy framework is being developed through an ongoing consultative
process with AIIB's Prospective Founding Members and other stakeholders.
26. Will the AIIB have untied procurement of
goods and services under its loans?
The AIIB will place no restriction upon the
procurement of goods and services from any country from the proceeds of any
financing undertaken in the ordinary or special operations of the Bank.
