Following the Senate ratification of the Articles of Agreement formalizing the Philippines’s entry as a founding member of the Asian Infrastructure Investment Bank (AIIB), the government can now request the AIIB to send a mission to the country to discuss the proposed list of projects prepared by the National Economic and Development Authority (Neda) for AIIB financing.
National Treasurer Roberto B. Tan said the Edsa Bus Rapid Transit (BRT) project and the Metro Manila flood-control project would be among the first items to be presented to the AIIB for possible funding.
“These are the projects that are the most prepared in terms of government approvals, feasibility studies and other requirements, and are already in the pipeline. So these projects can be processed most expeditiously for cofinancing by AIIB,” Tan said.
According to the national treasurer, the Philippines is looking at $300 million to $500 million as financial window that can be tapped from the AIIB for the initial year.
Finance Secretary Carlos G. Dominguez III pointed out that the BRT is also supported by the Asian Development Bank (ADB), while the Metro Manila flood-control project is being backed by the World Bank.
The finance chief has strongly backed the Philippines’s membership to the AIIB, explaining that this would provide the government another source of long-term funding at very reasonable interest rates for the Duterte administration’s infrastructure buildup.
“Achieving full membership in AIIB is a significant milestone. Completing our domestic procedures for ratification puts us in solidarity with 56 other countries,” Dominguez said.
“Funds from AIIB will serve as an additional source of concessional financing to support our growing infrastructure requirements. Its terms and conditions are comparable to those of other multilateral development banks,” Tan said.
The Senate, voting 20 to one, ratified on December 5 the Philippines’s entry into AIIB, beating the December 31 deadline set by the bank for members to submit their respective instruments of ratification.
In its briefing paper, the Department of Finance said “AIIB can provide financing to major capital investments of the government and the private sector. AIIB can support the government in reducing the infrastructure gap in the Philippines and accelerating annual infrastructure spending to account for 5 percent of GDP.”
AIIB is owned by 57 sovereign member-countries, with 37 members coming from Asia, and has a total capitalization of $100 billion. Its member-countries include Australia, China, South Korea, the United Kingdom, the Asean members (the Philippines, Malaysia, Thailand, Singapore, Brunei Darussalam, Indonesia, Lao PDR, Myanmar, Cambodia and Vietnam); and European states, such as Austria, France, Germany and Italy; Brazil, Russia, India
and South Africa.
AIIB started operations on January 17 this year. To date, the bank’s board of directors have approved six infrastructure projects worth $829 million.
“AIIB can contribute in closing the country’s infrastructure gap for the next six years, which is estimated at P8 trillion. The funding that we can tap from AIIB will support the infrastructure priorities under the Duterte administration’s 10-point socioeconomic agenda,” Dominguez said.