Japan announces investment to rival Asia’s new bank
Print Edition
JAPAN’S Prime Minister Shinzo Abe yesterday announced a US$110 billion investment plan for infrastructure projects in Asia in an apparent counter to a China-sponsored new development bank.
The amount of funds to be invested over five years tops the expected US$100 billion capitalization of the Asian Infrastructure Investment Bank, the new lender due to begin operations next year.
Japanese officials said that their plan, announced by Abe at a symposium of Asian officials, represents a 30 percent increase over Tokyo’s past infrastructure funding.
Japan said it wants to focus on “high quality” aid, for example, by helping recipients tap its expertise in reducing pollution while building roads and railways.
“We intend to actively make use of such funds in order to spread high-quality and innovative infrastructure throughout Asia, taking a long-term view,” Abe said in his speech.
About half the funds will be extended by state affiliated agencies in charge of aid and loans and the rest in collaboration with the Asian Development Bank.
Japan hopes the aid will attract private funds to help meet the vast demand for infrastructure in Asia.
The United States and Japan were caught off guard when a total of 57 countries, including Group of Seven members Britain, Germany and France had jumped onboard the AIIB bandwagon by March.
The two allies have stayed out of the China-led institution, seen as a rival to the US-dominated World Bank and Japan-led Asian Development Bank, although Tokyo for one is keeping its options open.
Japanese and Chinese finance officials will meet in Beijing on June 6 and may discuss the AIIB, but Tokyo looks unlikely to make a decision on joining the new bank any time soon.
Japanese lawmakers in the ruling Liberal Democratic Party who are looking into the matter will put together a report later this month or in early June, but will only state the pros and cons of joining or staying out, said Masahiko Shimayama, a member of the party panel.
“I think it’s unlikely that the government would make a decision on when to join based on our report,” he said.
“If it (AIIB) becomes a proper financial institution for the sake of Asia, there is no reason to be embarrassed about joining later,” Hagiuda said.
The AIIB is holding a meeting of founder members in Singapore this week to decide on the articles of association and operational details. A delegate to the conference, who wished to remain anonymous, said it was unlikely the new bank could start lending at the start of 2016 as predicted, given the need for member countries to get approvals from their legislatures.
“China hopes that members get such approvals by year-end and the operations start from the next year, said the Asian delegate. “But I wonder if it is possible, given domestic political situations in each country.”
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