Print Edition - 2014-06-13 | MONEY
asian infra investment bank plan
- July-end deadline set to confirm membership
Jun 12, 2014-
Nepal will have to decide whether to be a founding member of the proposed Asian Infrastructure Investment Bank (AIIB) or not by July-end. A meeting of government representatives from 22 countries held in Shanghai, China from June 9-10 to discuss the establishment of the bank set the July deadline.
A member of the Nepali delegation Kailash Raj Pokharel said that the Cabinet would have to reach a decision within the next one and half months. Nepal had responded positively to Chinese Finance Secretary Shi Yaobin’s request to become a founding member during his visit two weeks ago.
“Nepal agreed to become a founder as the bank plans to invest in the infrastructure of the member countries first,” said Pokharel. “Nepal badly needs increased investment in infrastructure to attain a high economic growth to reach developing country status by 2022.
According to a recent World Bank study, Nepal will need $ 13-18 billion through 2011-20 in order to bridge the investment gap in infrastructure.
A Finance Ministry official said that there had been some apprehension about joining the AIIB at the political level initially. “We later convinced Finance Minister Ram Sharan Mahat that joining the bank would be the best decision for the country as China is the second largest economy and a close friend of Nepal,” said another ministry official.
The Finance Ministry has sent a draft memorandum of understanding (MoU) about joining the bank to the Law Ministry for its feedback.
China had circulated a schedule for signing the MoU among the proposed founding members in October. The bank is slated to start operations in 2015.
As per the initial Chinese proposal, the AIIB’s paid-up will be $ 50 billion. “However, discussions on increasing the paid-up capital to $ 100 billion are being held, and the size is yet to be finalized,” said Pokharel, who is under secretary at Finance Ministry.
As per the proposal, China will put up 50 percent of the paid-up capital while other Asian countries will contribute 25 percent. Western countries will be invited to invest the rest.
The contribution of each founding member will be based on the size of its Gross Domestic Product. Nepal may be required to make an investment of $ 10 million with the payment to be spread over five years, said Pokharel.
Following the meeting in Shanghai, Nepal has become a member of the working group to establish the proposed AIIB.
The other participating countries in the conference included Sri Lanka and Pakistan from South Asia, South Korea, Malaysia, Thailand, Indonesia, Singapore and Laos from East and Southeast Asia and Kuwait, Saudi Arabia and Bahrain from the Gulf, said Pokharel.
Published: 13-06-2014 10:39