The Philippines on Wednesday confirmed its participation in the Beijing-led Asian Infrastructure Investment Bank to boost infrastructure development.
The Finance Department said Philippine Ambassador Erlina Basilio was scheduled to sign the articles of agreement of the AIIB before the deadline on Dec. 31.
It said the AIIB would augment and complement existing multilateral institutions in accelerating economic growth.
“Our shared pursuit of growth and development has only become more challenging as the global environment becomes increasingly complex. We thus welcome platforms where countries can work towards shared development goals in the spirit of partnership,” Finance Secretary Cesar Purisima said.
“In a globalized world, connectivity is the name of the game. AIIB is a promising institution addressing investment needs, and will help close financing gaps in many countries. I also see this as a chance for greater collaboration with member countries, especially with Asean, on regional infrastructure goals,” Purisima said.
The Asian Development Bank earlier estimated that Philippine infrastructure financing needs would reach $127 billion from 2010 to 2020, requiring an annual investment of $11.56 billion.
Asean also has a financing gap of $1.08 trillion through the decade.
The Philippines, according to the ADB, stands to gain from closing the gap in terms of accumulated reduction in trade costs estimated at 15.6 percent of trade value and will result in a gain of about $220 billion in real income.
The total capital stock of AIIB is $100 billion, 20 percent of which is paid-in. The indicative paid-in capital of the Philippines is $196 million, payable in five years or $39 million per annum.
“The Philippines has taken the matter of our membership in AIIB very seriously. We have participated in the discussions leading to its creation, believing that good governance is just as important in our international institutions just as they are at home,” Purisima said.
“We are confident that the bank’s organization design and oversight mechanisms are committed to transparency, independence, openness and accountability. We are likewise optimistic that AIIB’s decision-making processes are geared towards making it a lean, clean, green institution run like a true multilateral,” Purisima said.
President Benigno Aquino III on Tuesday gave the full powers to sign the AOA on behalf of the Republic to Purisima or Ambassador Basilio.
Among the 57 prospective founding members of the bank, the Philippines is the last to sign the AOA after 50 members already signed it on June 29, during the launch of the institution.
Purisima said through the participation in AIIB, market expansion was expected for infrastructure-related industries that would increase business growth opportunities among the players.
“The Philippines stands to gain from signing on as a founding member. We can look forward to deepening our country’s technical expertise in infrastructure as we expand bankable projects. Further, as the AIIB has no restriction on the procurement of goods and services from any country, we may foresee market expansion for infrastructure-related industries, widening job and business growth opportunities,” he said.
AIIB was officially established on Dec. 25 after it garnered enough countries’ domestic approval. AIIB is the first major multilateral lender with developing countries holding the majority of the shares and votes.
According to the AOA, the bank can be legally valid as long as more than 10 countries, with their represented total subscribed capital no less than 50 percent of the total capital, get the AOA approved by their legislatures.
China’s Ministry of Finance said 17 countries already approved the mini-constitution and submitted to Beijing. Their combined subscribed capital makes up 50.1 percent of the total.
The 17 countries are Myanmar, Singapore, Brunei, Australia, China, Mongolia, Austria, the United Kingdom, New Zealand, Luxemburg, South Korea, Georgia, the Netherland, Germany, Norway, Pakistan and Jordan.
Members have until December 2016 to complete domestic ratification and other approval processes, as well as to pay the initial tranche of the corresponding paid-in capital.
The opening ceremony and inaugural meeting of the board of governors and the goard of directors in Beijing will take place on the third week of January 2016.