[Liu Lunan, Feng Xiuxia and Zhang Yunbi/China Daily]
Pakistani Minister of Finance and Revenue Mohammad Ishaq Dar lauded a China-led funding initiative as “historic”, as Beijing gathered together 20 regional members to build a bank to fund infrastructure projects in Asia.
The minster is on a two-day visit to Beijing for the signing ceremony on Oct 24 of a memorandum of understanding leading to the establishment of the Asian Infrastructure Investment Bank.
In an interview with China Daily, Dar said China’s leadership “has shown great vision and farsightedness” in leading the initiative, which enhances regional connectivity, and Beijing looks set to “get smaller and medium-sized nations in Asia to sign on to a bank where these nations would get equal treatment”.
The planned multilateral development bank will fund projects to address infrastructure deficits. One of the missions Dar has undertaken in his China trip is to lobby Chinese financial institutions to address the thirst for funding.
During a meeting with his Chinese counterpart Lou Jiwei in Beijing, on Oct 23, he urged more investment in the Diamer Bhasha dam, which will create a 39.6 billion-cubic-meter reservoir and the capacity to produce 4500 MW of electricity.
In Dar’s eyes, “underdeveloped infrastructure” is the major challenge that over-shadows most emerging Asian countries because most projects “have been funded by governments or domestic banks”.
“Multilateral institutions, such as the World Bank and the Asian Development Bank, mostly focus on projects aimed at poverty reduction rather than on infrastructure development. Foreign investors also were mostly not present,” Dar said.
But the AIIB is not a threat to the World Bank or the ADB because it “will target an area that has not been a high priority for the other multilateral development institutions”, the minister said in response to some criticisms of the AIIB.
“The Asian countries, too, have the right to develop their own infrastructure in accordance with their own priorities, and the AIIB is an effort in that direction,” he said.
Looking back at the past 10 months of multilateral financial authorities’ talks and the deliberations over a memorandum of understanding regarding the bank, Dar said he was impressed that “China has taken everyone along in the finalization of the MOU, and at no point did any participating member feel their suggestions were not accepted”.
“China has also shown steadfastness in adhering to the time frame that it had announced a year ago,” he said.
Regarding Pakistan’s vision and plans about the bank, Dar said since Pakistan is a founding member of the AIIB, Islamabad expects this bank “to be inclusive in development, transparent in its business” and to become “a game changer for Asia and the rest of the world”.
Founding members including Pakistan have supported the view that AIIB “should be open for membership to all interested Asian countries”, the minister said.
“We believe that Bank will constitute an important platform to convert the abundant savings available in the region into investment to help regional economies in sustainable and rapid development, and to contribute to the world economy,” Dar said.
Pakistan is sparing no effort in boosting infrastructure construction and tackling energy supply in order to revitalize its economy.
The two countries share common ground. Last year, China proposed two strategic initiatives－the New Silk Road Economic Belt and the 21st Century Maritime Silk Road, for which Pakistan has voiced strong support.
The major bilateral initiative of the China-Pakistan Economic Corridor, like the Silk Road initiatives, will benefit from the AIIB since the AIIB will mainly focus on infrastructure construction, Dar said.
He noted that the Silk Road projects are “instrumental in laying the foundation for regional cooperation” and, for countries along the road, “international trade is the only option to sustain economic growth and development”.
A QUICK LOOK AT THE LEADING INTERNATIONAL FUNDING BODIES
Founded in 1944 at the Bretton Woods Conference as Allied victory in WWII looked increasingly certain, the World Bank is a UN financial institution that gives loans to countries for projects. It is made up of two development institutions of 186 members－the International Bank for Reconstruction and Development and the International Development Association. They provide low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications or any approved projects. The World Bank provided $60 billion of funding in 2013.
The International Monetary Fund was also initiated at the Bretton Woods Conference and was established by international treaty in 1945 to help promote the health of the world economy. Its headquarters are in Washington, like the World Bank, and it is governed by its 186 members. The IMF’s statutory purposes include promoting the balanced expansion of world trade, the stability of exchange rates, the avoidance of competitive currency devaluations, and the orderly correction of a member’s balance of payments.
Asian Development Bank
With headquarters in Manila and established in 1966, the ADB is owned by 67 members, including 48 from the region, and focuses on reducing poverty in the Asia-Pacific region, which remains home to approximately two-thirds of the world’s poor. The ADB reportedly has about $13 billion of new lending and new approvals each year.