Australia to join China-led infra bank

Australia, on Wednesday, announced that it would join the new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member, contributing about $930 million to the financial institution of which India will be the second largest shareholder.

“We look forward to working with other members to lay the foundations for an effective new multilateral institution, which is expected to be operational by the end of the year,” Australian Foreign Minister Julie Bishop said.

“Australia will contribute around A$930 million as paid-in capital to the AIIB over five years and will be the sixth largest shareholder,” she said. AIIB will have paid-in capital of $20 billion (A$25.2 billion) with total authorised capital of $100 billion (A$126.2 billion).

Treasurer Joe Hockey will attend the Articles of Agreement signing ceremony at the Great Hall of the People, Beijing, on June 29, according to an official statement.

Australian government’s decision has come after extensive discussions with China and other key partners globally.

According to official statement, there was an estimated infrastructure financing gap of around $8 trillion in the Asian region over the current decade.

The AIIB will be part of the solution to closing this gap, it said. “Joining AIIB presents Australia with great opportunities to work with our neighbours and largest trading partner to drive economic growth and jobs. AIIB will work closely with the private sector, paving the way for Australian businesses to take advantage of the growth in infrastructure in the region,” the statement said.

“The governance of AIIB will be based on best practice, ensuring that all members will be directly involved in the direction and decision- making of the bank in an open and transparent manner,” it said.

The AIIB, which will be headquartered in Beijing, is designed to finance infrastructure construction in the continent. The bank already has 57 prospective members.

However, it has been shunned by the United States and Japan, the world’s largest and third largest economies.