Prospects of Asian Infrastructure Investment Bank

Abstract

Infrastructure investment is one of the new sources of growth beside trade. However, the availability of infrastructure has become one of the major problems in the process of economic development in the region. Given the need for huge capital infrastructure in the region and the presence of the financing gap in infrastructure financing, the People Republic of Chinese (PRC) initiated the establishment of the Asian Infrastructure Investment Bank (AIIB). Thus, AIIB is expected to accelerate economic development and integration of Asia through the promotion of investment in the infrastructure sector. AIIB have several priority areas include transport, energy, communication, industry, and agriculture. The study used qualitative methods to compare the performance of various Multi Development Banks (MDBs) that existed such as IMF, ADB, IDB and WB with AIIB work plan. The results of this study will be expected to produce policy recommendations related to the formation of AIIB. AIIB initiative is the establishment of a relevant step with the spirit of accelerating economic development and integration of Asia to promote investment in the infrastructure sector. AIIB priority areas including transportation, energy, communication, industry, and agriculture is also a priority in developing countries. Openness in terms of membership (open regionalism) also showed that AIIB not only managed exclusively by the emerging countries in Asia but also opened to countries outside the region. The prospects of AIIB will be determined by how far the founding of PRC government transparency in every process both on stage and in the establishment of operational AIIB, how funding of AIIB direction forward and ensure it will not happen tied financing. This condition will be considered countries in the Asian region to join as founding members of AIIB.