The recently launched Asian Infrastructure Investment Bank will provide Korea with business opportunities in the regional infrastructure sector, the South Korean government said Sunday, pinning high hopes for the China-led agency to elect a Korean vice secretary-general next month.
“Finance Minister Yoo Il-ho’s presence (at the AIIB’s meeting in China on Saturday) will contribute to strengthening Korea’s global ties with China and the developing members of the AIIB,” the South Korean Ministry of Strategy and Finance in a press release.
“We expect that (the AIIB) will become a milestone for industrial development in the region that will bring us diversified overseas market portfolio and larger profit,” the ministry added. It stressed the strong presence of South Korea in the AIIB, envisioned Finance Minister Yoo’s delivery of the congratulatory speech at the event.
Finance Minister Yoo Il-ho delivers a congratulatory speech at the AIIB’s meeting in Beijing on Saturday. (Ministry of Strategy and Finance)
In 2016, the AIIB Board of Governors agreed on plans to engage in five to 10 projects in 2016, with loans estimated at some $500 million to $1.2 billion. The infrastructure bank plans to increase the size to $1.5 billion-$2 billion by 2017, and $2.5 billion-$3 billion by 2018.
By investment sectors, the agency’s prospective portfolio includes 35 percent in transportation, 25 percent in energy and 25 percent in hydro resources and city planning.
When assigning deals to members, the AIIB’s decisions are not made through individual votes, but through mutual negotiations among members. This means greater influence at the AIIB leads to higher profit, according to experts.
South Korea currently is the fifth-largest stakeholder of the AIIB, with a 3.81-percent stake and 3.5 percent voting rights. By joining hands with Israel (0.76 percent), Uzbekistan (0.22 percent) and Mongolia (0.04 percent) for a greater voice, Korea has collected a total of a 4.83-percent stake, meeting the 4.5 percent minimum requirement to become an AIIB board member. The four country’s voting rights amount to 5.16 percent.
Accordingly, Song In-chang, the director general of the international finance policy unit of the South Korean Finance Ministry, was elected to the 11-member board of AIIB in Saturday’s vote.
(Ministry of Strategy and Finance)
The AIIB also reached an agreement on the general rules of the its operation. It elected Jin Liqun, the former monetary policy committee member and supervisory chairman of China’s sovereign wealth fund, as its chief.
The AIIB pushed back the appointment of its vice secretary-general, a position that South Korea has craved for since joining the infrastructure bank. The announcement, originally to be announced Saturday, was delayed to mid-February for unknown reasons.
The Beijing-based AIIB officially launched on Dec. 25 with a paid-in capital of $20 billion and total authorized capital of $100 billion, to compete with two of the world’s leading development banks -- the U.S.-led World Bank and the Japan-led Asian Development Bank.
The AIIB has 57 members, including China, South Korea, Russia, India and Germany. The pool of members also includes Britain and Australia, notable U.S. allies. Japan, Asia’s second-largest economy, did not participate in the China-led agency.
By Chung Joo-won (firstname.lastname@example.org