The Philippines will be joining the Asian Infrastructure Investment Bank (AIIB) after months of careful consideration, believing that the China-backed institution will augment and complement existing multilaterals in accelerating economic growth.
The Department of Finance on Wednesday announced that the government would be signing the AIIB Articles of Agreement (AOA) today, December 31, the last one among the bank’s Prospective Founding Members.
Full powers to sign on behalf of the country were granted by President Benigno Aquino 3rd on December 29 to Philippine Ambassador to the China Erlina Basilio.
“The Philippines has taken the matter of our membership in AIIB very seriously. We have participated in the discussions leading to its creation, believing that good governance is just as important in our international institutions just as they are at home,” Finance Secretary Cesar Purisima said.
The Finance chief also said the government was confident that the bank was committed to transparency, independence, openness, and accountability.
The AIIB’s decision-making processes are also geared towards making it a lean, clean, green institution that will be run like a true multilateral, Purisima added.
In a globalized world where connectivity is the name of the game, the Finance chief claimed the AIIB was a promising institution that would address investment needs and help close financing gaps in many countries.
“The Philippines stands to gain from signing on as a Founding Member. We can look forward to deepening our country’s technical expertise in infrastructure as we expand bankable projects,” he said.
The government also sees AIIB membership as a chance for greater collaboration with member countries, especially with the Association of Southeast Asian Nations, on regional infrastructure goals.
The Asian Development Bank (ADB) has estimated Philippine infrastructure financing needs from 2010 through 2020 to be at $127.12 billion, requiring an annual investment of $11.56 billion.
The Philippines, the ADB said, stands to benefit from closing this gap: the accumulated reduction in trade costs is estimated to be at 15.6 percent of trade and will result in a gain of about $220 billion in real income.
The Finance department noted that the total capital stock of AIIB would be $100 billion, 20 percent of which is paid-in. The indicative share of the Philippines is $196 million, payable in five years or $39 million per annum.
Purisima also noted that as the AIIB would have no restriction on the procurement of goods and services from any country, the Philippines can expect market expansions for infrastructure-related industries, widening employment and business growth opportunities.
“Our shared pursuit of growth and development has only become more challenging as the global environment becomes increasingly complex. We thus welcome platforms where countries can work towards shared development goals in the spirit of partnership,” he said.
The opening ceremony and inaugural meeting of the AIIB Board of Governors and Board of Directors will take place in Beijing during the third week of January 2016.
Members have until December of next year to complete domestic ratification and other approval processes as well as pay the initial tranche of paid-in capital.