AIIB ups funding cap under Crisis Recovery Facility
by Wei Lynn Tang
The Asian Infrastructure Investment Bank (AIIB) wrapped up its two-day virtual annual meeting on Wednesday.
A large focus during the various webinars held was on: how can and should member countries and businesses adapt to a post-COVID-19 era.
Already, the Beijing-based multilateral bank has launched a Crisis Recovery Facility and approved 5.9 billion US dollars – about a third of its nearly 20 billion investment portfolio since 2016 – to help 12 of its members (including India, Pakistan, Indonesia) alleviate economic, financial and public health pressures arising from the pandemic.
At an online press conference on Tuesday, Jin Liqun – who will retain his position as AIIB's president for a second 5-year term starting January 2021 – said, "the facility will now offer up to 13 billion dollars of financing under the facility."
This is a further increase from a 5-to-10-billion-dollar cap made previously, which covers the period of April 2020 to October 16, 2021.
While Jin said the AIIB swiftly pivoted its investment strategy and launched this facility, he also noted that the bank is "eager to get back to business to funding normal infrastructure projects – as soon as possible."
"Under the current circumstances, we certainly have to deal mainly with the containment of COVID-19, but at the same time, we should not lose sight of implementing the infrastructure projects to the extent possible," he said.
Meanwhile, Chinese President Xi Jinping, who opened the annual meeting, called for the AIIB to be a new platform that progresses with the times and one that performs highly in terms of international cooperation.
"The global response to COVID-19 has made it clear that mankind rises and falls together in a community with a shared future. Mutual support and cooperation in solidarity are the only way for mankind to overcome crises," he said.
"To address issues emerging in the course of economic globalization, countries should pursue more inclusive global governance, more effective multilateral institutions, and more robust regional cooperation."
Specifically, Xi said the AIIB should "commit itself to serving the development needs of all its members and providing more high-quality, low-cost, and sustainable investment for both traditional and new types of infrastructure."
Members of the AIIB echoed.
Joachim von Amsberg, Vice President, Policy and Strategy, said the pandemic had, in some ways, increased tendencies towards protectionism, which is another form of disrupting connectivity.
"Those tendencies may have been there before, but in the area of medical supplies, we really hope that will subside and recede to be able to address the crisis when vaccines need to be shipped around the world," Amsberg said in a webinar on "regional connectivity post-COVID-19".
From a commercial standpoint, Dubai-based logistics company, DP World said if the pandemic has taught them anything, is that "supple chain is adaptable and robust, and that we can move very quickly".
"What our clients are telling us is there's definitely a need for greater flexibility and elasticity in the supply chain," said Raj Jit Singh Wallia, Deputy Chief Financial Officer of the company, one of the world's largest port operators.
"We've had corporates in countries which are huge suppliers for purely domestic demand overnight realized that consumption is down … it very quickly pushed us to adapt and change, and their exports went up by 400 to 500 percent in some cases," said Wallia.
"Also, you're definitely going to see regionalization, manufacturing will move away from a central location, possibly to countries like Thailand, Vietnam, Mexico, India. And you're definitely going to see a greater emphasis on digitalization and technology."
Other topics discussed during the annual meeting include: how private equity can be used to catalyze private capital into infrastructure investments in emerging markets and to close the digital divide between countries.
At the meeting, the Board of Governors has approved the application of Liberia to join the bank, bringing its approved members now to 103 from around the world. The AIIB now has 10 members and nine prospective members from Africa.
The AIIB also announced that its sixth Annual Meeting would be held in Dubai, the United Arab Emirates, from October 27 to 28 in 2021.