Interview: Jin Liqun, President, Asian Infrastructure Investment Bank (AIIB)
How do you see AIIB supporting infrastructure development in ASEAN in the coming years?
JIN LIQUN: ASEAN countries were some of the first to join AIIB, and we greatly appreciate their support. We have already begun investing in ASEAN infrastructure, including projects in Myanmar and Indonesia. As a multilateral development bank we can play a number of different roles in infrastructure project financing, and as a new institution we have a clean, healthy balance sheet, meaning we have more capital available for projects.
As a multilateral we are able to improve the bankability of a project with best-practice structuring and risk mitigation, thereby making it a more attractive investment for private companies. This “crowding in” of private capital will be critical in addressing the current infrastructure gap across ASEAN. From our vantage point, we see how the infrastructure plans of our members fit together. We can help connect the dots to ensure there is an alignment and coordination of policies across borders; a rail network is only effective if goods and people can easily travel across it. This is where ASEAN has an opportunity to work collaboratively in order to create policies that will maximise the positive outcomes of infrastructure investment.
Which challenges will be most difficult to overcome in the development of sustainable projects?
LIQUN: There is broad recognition of the importance infrastructure plays in combating climate change, especially with Asia’s rapid population growth and intensifying rural-to-urban migration. With this in mind, and for the sake of future generations, we must apply a sustainability lens to all of the infrastructure supported by AIIB. A key challenge is to identify projects that are of a very high quality. As part of our Sustainable Energy for Asia Strategy, AIIB will invest in energy projects that help our members transition to a low-carbon future. To achieve this, we need a pipeline of forward-thinking projects that will improve access to affordable energy for the millions of people in Asia. Part of this solution is to make the most of existing energy infrastructure through rehabilitation and upgrades to existing generation, transmission and distribution networks, and aggressively pursue energy efficiency programmes. We are also actively identifying ways to promote renewable energy projects, such as wind, solar, biomass and hydropower. However, these must be done in an environmentally and socially sound manner. To meet our standards for quality, projects must be financially viable, eco-friendly and be embraced by local communities. There are a limited number of projects that meet this standard, and for the ones that do, there is a lot of competition to fund them. We have a special fund available to our qualifying members to help them secure the resources they need to prepare sound, bankable projects. We hope this fund will contribute to an increase in the availability of worthwhile, sustainable infrastructure projects.
Are current regulatory frameworks for public-private partnerships (PPPs) in ASEAN effective?
LIQUN: PPPs are important in mobilising private capital into infrastructure investments. It is encouraging to see there is increasing enthusiasm and willingness of ASEAN countries to improve their national regulatory frameworks to promote PPPs. Multilateral development banks (MDBs) can play an important role in assisting in the improvement of national regulatory frameworks, as well as in structuring and investing in PPP projects. AIIB, as a member of the MDB family, stands ready to support this endeavour. Our comparative advantage is that we can provide public and private financing from one balance sheet, which allows us to optimise our investment decisions and resource allocations. We are developing strategies to mobilise private capital in infrastructure investment. We are keen to have conversations with those ASEAN countries who are also AIIB members, in order to best support PPP development.
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