AIIB priorities as Jin Liqun starts second term

WASHINGTON/MANILA — In its annual meeting this week, the Asian Infrastructure Investment Bank board elected Jin Liqun — the sole nominee — for a second term as president, and officials spoke about the bank’s COVID-19 response and outlined its goals for the future, including on climate change.

AIIB launched nearly five years ago, growing to 103 members and investing almost $20 billion in infrastructure projects. The projects have primarily been in Asia, though the bank did invest in one nonregional member country: Egypt.

In the coming five years, Jin would like AIIB to invest more in nonregional members, because “Asia should not expect to grow on its own without close collaboration and regional cooperation with other regions, other countries,” he said at a press conference.

One of Jin’s chief priorities going into his second term is to get AIIB’s corporate strategy approved, which he expects the board will do by the end of the year, he said.

While the draft corporate strategy was mentioned during the online sessions of the annual meeting, it has not yet been shared for civil society review or input, civil society organizations said prior to the meeting. They also criticized the bank’s limited engagement with them and with communities about bank projects and key strategies.

Jin said that the bank will need to build up its lending program to “play its proper role” and is focused on trying to “strike a proper balance between the fast expansion of our business” and making “sure the quality of our lending program will not be compromised.”

While the bank is looking to the future, and to how it can increase its climate investments, it first needs to get past the coronavirus crisis, Jin said.

“As a development bank focused on infrastructure development, we certainly will try to go back to normal business as fast as possible,” he said at the press conference. “At this moment, we are dealing with [an] emergency. Once COVID-19 is contained, we will try to do the normal, regular infrastructure projects as soon as possible.”

COVID-19 response

Multilateralism will be key to containing the coronavirus pandemic, Jin said during a virtual session of the AIIB annual meeting.

“When each and every one work individually, their power is limited. When we all work together, it's almost unlimited,” Jin said.

While infrastructure investment is and remains at the core of the bank’s business, he said the present crisis has led the bank to set this aside for the moment and work with other multilaterals, as well as governments and the private sector, to contain the pandemic.

In April, the bank launched a Crisis Recovery Facility — initially a financing facility for $5 billion, which has since been doubled to $10 billion — to respond to urgent economic, financial, and public health pressures brought about by COVID-19. The board recently approved another expansion of the facility, with the target now at $13 billion, $6 billion of which has already been committed. The financing has helped supply medical equipment to countries, improve countries’ pandemic preparedness, and provide liquidity to the private sector and budget support to governments, Jin said.

Members of civil society have voiced their concerns about the Crisis Recovery Facility funding, saying these are loans that only add to countries’ debts.

AIIB will also fund health care infrastructure projects outside of the facility as regular projects, Jin said.

“Only by subduing COVID-19 pandemic could it be possible for us to go back to the mainstream business. So I will say this is like firefighting: When the house is on fire, the first you do is put out the fire, and then you do the normal business,” he said.

But the pandemic has also led to the realization of the importance of health care, and Jin said that in the future, AIIB may allocate a portion of its resources to health care, which is a form of social infrastructure.

“Health care can improve the quality of human resources. Health care can improve the productivity of a nation. So this part of infrastructure is also very, very important. This is what we learned from the lesson of the COVID-19,” he said.

Living up to being green

One of the key goals for the bank in the coming years is to focus on climate change, which is a challenge that will require long-term efforts, Jin said at the press conference.

The bank is trying to live up to its principles of being a green bank. For example, it uses modern technology to help monitor project implementation with fewer field visits, Jin said during a session later.

“We actually can engage the local consultants to monitor ... the implementation of the building of roads. We capture all the images. We know what's going on, without so many boots on the ground,” Jin said.

“We still need, when it's possible, to have field visits, but we can improve the implementation by the new technology. So I think it's green,” he said.

AIIB has a lending target of 50% for climate change mitigation by 2025 — up from 39% of the bank’s deals in 2019 — which Jin said it can achieve. While the bank has no coal-related projects in the pipeline, he said transitioning countries that are dependent on fossil fuels toward zero-carbon economies takes time.

“It's not realistic for these countries to shut down 50%, 60 or 70% of their economy. So the best way is for multilateral development banks like ours to help them develop green, renewable projects,” he said.

“This is what we are doing, and we do not have any coal-related projects in our pipeline, and we will not do that. What we do focus on is to help these countries to move away from fossil fuels as fast as possible. At this stage, gas-firing power plants look like a stepping stone for these countries to step down from the coal or high-carbon energy projects,” he added.

The bank is currently reviewing its environmental and social framework, trying to build on its experience thus far, Jin said.

“We always believe it’s very, very important for infrastructure projects we finance to bring benefits to the local people,” including around the environment and gender balance, he said. “We take this very seriously.”