THE news that the Asian Development Bank (ADB) and the Japan International Cooperation Agency (Jica) have recently established a $16-billion investment fund for financing infrastructure projects in the Asia-Pacific region is most welcome. The fund will serve as a guarantee that ADB, with Jica support, will be able to underwrite most of the infrastructure requirements of the Asia-Pacific countries.
Whether intended, this expanded ADB facility will serve to neutralize some of the attractiveness of the new Chinese-established and -sponsored Asian Infrastructure Investment Bank (AIIB). Many of the countries that signed up to join that bank did so, partly to hedge their reliance on ADB, and partly to ensure that they are not left behind in the receipt of manna from China, whatever that may be. With ADB now in control of an expanded facility and China sliding into stagnation, the anxiety of Asia-Pacific countries may now be bereft of objective basis.
The $16-billion fund, as announced by ADB, will finance infrastructure projects undertaken by the private sector, including those won in public-private partnership schemes. The governor of ADB is quoted as saying that the fund will be used to assist in the establishment mainly of urban transport, renewable-energy projects and climate-mitigation programs in the countries of Asia and the Pacific.
The ADB, at the same time, announced that, with Jica and itself contributing $5 billion each, it will administer another $10-billion fund for sovereign borrowers undertaking sustainable infrastructure projects. Given a well-known inability of some governments in the region to produce carefully crafted infrastructure-development plans eligible for financing, the fund will include technical assistance for preparing and implementing projects.
In aiming its financial assistance to specific projects and programs, the ADB announced that its financing program in the large will focus on the achievement of the Sustainable Development Goals (SDGs) identified by 193 countries, including the Philippines, in September 2015. The core of these SDGs consists of the establishment of resilient infrastructure; the promotion of inclusive industrialization; and the acceleration of development through technological innovation.
All these are welcome developments for ADB member-countries. They have enjoyed low interest loans for industrial sector development and infrastructure projects in the past. With the Japanese government now generously coming into the scene, they will have access to more abundant resources in the years ahead.
What about AIIB? Explicitly stated or not, the objective of China is to use AIIB to wean Asia-Pacific countries away from the Japan- and US-dominated ADB, and bring them into the Chinese ambit. So AIIB will be there somewhere offering an additional facility to its member-countries. But Asia-Pacific countries should not overly work themselves up. They should judge the matter from their own perspective. The Philippines is not interested in joining, at least not at this time; while some bosom friends of the US, like Australia and even some European countries, have signed up for membership. All these countries should avail themselves of AIIB’s resources if these are available for development purposes without any strings more than that of the ADB financing.
Image credits: Jimbo Albano