The national government’s commitment to the China-led Asian Infrastructure Investment Bank (AIIB) remains contingent upon the bank’s governance structure.
This was stressed by National Treasurer Roberto B. Tan, who will be attending the AIIB meeting in Beijing, China, this week.
In October 2014 the Philippines signed a nonbinding memorandum of understanding to join discussions for the establishment of the AIIB. The country is among 21 Asian countries that are participating in this process.
“How will it be governed and how responsive it will be to the needs, in particular, of the poorer members of the AIIB?” Tan said.
Tan explained that, apart from the role of the AIIB Board of Directors, there is a need to ensure that transparent procurement processes are followed, as well as placing safeguard measures for projects.
These safeguard measures are to be put in place to protect the environment, and as means of social protection for borrowing countries.
Multilateral development banks (MDBs), like the Asian Development Bank (ADB), have a Safeguards Policy Statement (SPS) that contains the bank’s measures to ensure that negative impacts of its development intervention in its member-countries are mitigated, if not totally avoided.
The SPS policies are usually a bone of contention between MDBs and civil-society organizations that are working to protect the rights of communities in areas affected by MDB projects.
“[It’s not only] the role of board of directors [but] how do you ensure that projects are [above board], the priorities [for projects], at the same time [if] they have the necessary conditions, like protecting [the] integrity of procurement, environment and social protection. All of those will be [and] are being discussed,” Tan said.
The AIIB aims to position itself as an alternative funding source for infrastructure projects in Asia.
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, International Finance Corp. (IFC), and other existing organizations could only provide, at the most, $50 billion a year. This leaves around $750 billion worth of infrastructure projects unfunded this decade.
In the Philippines Economic Planning Secretary Arsenio M. Balisacan said the national government alone intends to increase its infrastructure spending to at least 5 percent of the country’s gross domestic product, or about P826 billion, by 2016 order to support the growth requirements in the coming years.
Based on the Comprehensive and Integrated Infrastructure Program 2013-2016 and Beyond, the priority programs and projects for the infrastructure sector comprise a total of 3,077 projects, with total investment requirements amounting to about P6.58 trillion.
Nearly P3 trillion, or 45.4 percent of the total, is allocated for the development of the country’s transport system covering air, land and water, while P1.37 trillion, or 20.8 percent, is for social infrastructure to ensure the protection of public health and the environment, improvement of access to quality health and education facilities, and access to decent housing and services.
Another P1 trillion, or 15.4 percent of the total, is earmarked for the equitable and efficient management of water resources to ensure adequate, safe and sustainable water for all; and P847 billion, or 12.9 percent, is for sustainable, diverse and reliable energy sources.
The remaining P89 billion, or 1.3 percent, is for the provision of fast, reliable and affordable information and communications technology.
The AIIB was proposed by China’s President Xi Jinping during a visit to Southeast Asia in October 2013. The creation of the AIIB was also in line with China’s proposed Maritime Silk Road of the 21st Century that will include China and 10 Southeast Asian nations located in the Pan-Beibu Gulf.