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NEW UPDATES Asean Affairs  1 July 2015  

RI invests big in China-led infrastructure bank

Indonesia will become the eighth-biggest donor in the Asian Infrastructure Investment Bank (AIIB) as government officials have expressed hopes that the China-led bank could be the solution for large infrastructure financing gaps in Southeast Asia’s largest economy.

Finance Minister Bambang Brodjonegoro was in Beijing on Monday, as an agreement was struck that Indonesia would invest US$672.1 million over five years for its membership in the AIIB.

The AIIB is scheduled to fully operate early next year and Indonesia hopes that the bank could provide the required support and financing for the country’s infrastructure projects as soon as it goes into operation, the Finance Ministry said in a statement.

“The AIIB would provide quite hefty funds that we could utilize to our advantage,” Coordinating Economic Minister Sofyan Djalil said on Monday. “For our big infrastructure projects, we now have more diversified funding sources.”

Indonesia would become the eighth-biggest donor in the AIIB, which would operate with an initial capital of $100 billion.

The AIIB will see China as its biggest shareholder with initial capital subscription of $29.8 billion, with India, Russia, Germany and South Korea rounding out the top five, according to Bloomberg.

There were 57 countries that acted as cofounders of the AIIB, which analysts see as a competitor to the US-led World Bank and Asian Development Bank (ADB), with Japan becoming the largest shareholder for the latter.

The hefty investment that Indonesia made to the AIIB came after President Joko “Jokowi” Widodo called for reform in global financial architecture during the Asian-African Summit in April. In his speech, the President lashed out at what he called an “obsolete” role played by multilateral lenders such as the World Bank, the ADB and the International Monetary Fund in the global economy.

After Jokowi’s statements, Bambang followed up by saying that Indonesia could hand the financing for large-scale infrastructure projects to the AIIB. Criticisms from the US toward the China-led bank have been “very critical, very harsh”, the finance minister said.

A month after the Asian-African Summit, World Bank president Jim Yong Kim met with Jokowi at the Presidential Palace — in his first visit to Indonesia as leader of the US-based bank — where the former offered $12 billion in loans to be tapped by the Indonesian government for the country’s planned development projects.

In a statement made available to the press on Monday, Kim argued that the World Bank and the AIIB should not be seen as competitors, instead arguing that he viewed the new lender as “an important new partner that shares a common goal”.

“More funding for infrastructure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running,” Kim stated.

“With strong environmental, labor and procurement standards, the AIIB will join us and other development banks in addressing the huge infrastructure needs that are critical to ending poverty, reducing inequalities and boosting shared prosperity,” he added.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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