A mid the recent decision of the Asian Development Bank (ADB) to collaborate with the Asian Infrastructure Investment Bank (AIIB), groups expressed the need for the China-led institution to adopt safeguard standards.
Safeguard policies, which are part of the governance structure of multilateral development banks (MDBs) like ADB, are necessary to ensure that projects funded by these institutions are socially and environmentally responsible.
“We appeal to the bank [AIIB] and the leaders of China to carry the concerns and needs of Asia’s most vulnerable groups and communities through the creation of superior safeguard policies,” said Rayyan Hassan, executive director of the civil-society network NGO Forum on ADB.
The NGO coalition added that the AIIB must ensure that its operations respect local traditions, culture and knowledge systems.
These include those involving indigenous peoples, ethnic and cultural minorities, women, children, persons with disabilities, and sexual-orientation and gender-identification expression.
The forum also said the bank’s projects and programs should not harm local environment, ecosystem and biodiversity, as well as thoroughly consider climate-change impacts.
“Given that the AIIB is founded on lessons learned from existing MDBs and private sector, the bank is on the right path toward institutionalizing socioenvironmental shields that would minimize, if not outrightly contain, any collateral damage or rights-based violation caused by poorly implemented development projects,” Hassan stated.
Apart from safeguard policies, the AIIB’s overall governance structure is of utmost concern to countries like the Philippines.
While the Philippines has signed a memorandum of understanding to join discussions to establish the AIIB, the country’s commitment to join the AIIB remains contingent on the MDB’s governance structure.
Earlier, National Treasurer Roberto B. Tan said the governance
structure of the AIIB must be responsive to the needs of poorer members of the MDB.
One of these needs is for a transparent procurement process,
according to National Economic and Development Authority Deputy Director General for Programming Rolando G. Tungpalan.
Tungpalan told the BusinessMirror that when the country obtains official development assistance loans from the ADB, their
procurement process will be followed, which often subscribes to international competitive bidding.
Under cofinancing arrangements between the ADB and other MDBs, like the Agence Française de Developpement, or the French Development Agency, and the European Investment Bank, the bigger lender’s procurement rules will be followed.
ADB President Takehiko Nakao and AIIB Multilateral Interim Secretariat Secretary-General Liqun Jin agreed to cofinance infrastructure projects on the sidelines of the ADB’s 48th Annual Meeting in Baku, Azerbaijan.
Nakao and Jin agreed that both MDBs can play a critical role in closing the infrastructure gap in the region. These infrastructure projects can support sustainable development and poverty reduction, and the importance of safeguard policies on environmental and social impacts of projects.
“The ADB will cooperate and cofinance with the AIIB on infrastructure financing across Asia by using our long experience and expertise in the region,” Nakao said.
In May last year, ADB East Asia Department Director General Ayumi Konishi said the infrastructure needs of Asia are expected to double to around $800 billion a year in the 2011-to-2020 period, from around $400 billion a year in the preceding decade.
But, Konishi said, multilateral institutions, like the ADB, the World Bank and International Finance Corp., and other existing organizations could only provide, at the most, $50 billion a year. This leaves around $750 billion worth of infrastructure projects unfunded in this decade.
The AIIB was proposed by China’s President Xi Jinping in a visit in Southeast Asia in October 2013.