(Yicai Global) Jan. 18 -- The China-backed Asian Infrastructure Investment Bank celebrated its first anniversary two days ago. During the year, the bank established and improved its organizational structure and lent USD1.727 billion to nine projects in seven developing Asian countries. More infrastructure projects are expected to come in the future.
"AIIB aims to promote infrastructure financing in Asia and give impetus to economic and social development, and has made significant progress in the first year of operations," President Jin Liqun told Yicai Global in an interview. "It has firmly grasped infrastructure themes, such as roads and electricity."
Jin has continually stressed that the bank is a lender and must consider investment returns, but this time he emphasized the bank's tolerance for risks in private sector projects and that such schemes can better create jobs.
For private sector jobs with a good cooperative base the lender may not require a guarantee, but the project must be recognized by the country and benefit from subsidies. The only uncertainty in the sector is political risk, and if political continuity can be ensured, the risk is greatly reduced. The bank's International Advisory Panel strongly supports AIIB's efforts to promote private sector development, which is an important way to help countries develop.
AIIB can provide loans to high- and middle- income countries, and can also offer good asset quality and enhance the ability to resist risks. It is therefore tolerable for some projects to suffer losses if the majority get good returns.
The payback period for private sector projects is up to 18 years and can be extended to 20 years in extenuating circumstances, with a maximum of 35 years available to sovereign-guaranteed projects, Jin added.
The Asian Infrastructure Investment Bank has 57 founding members, 75 percent of which are Asian countries. So far, the bank has received applications from over 20 countries and expects to have almost 90 member states by the year end.