Capital contributions, voting rights top agenda
Capital contributions and voting rights will likely be the key issues when representatives of 57 prospective founding members of the Asian Infrastructure Investment Bank (AIIB) met this week in Singapore, experts said.
It is the fifth chief negotiators' meeting on establishing the bank, and the meeting will discuss the draft Articles of Agreement (AOA) and operational policies of the AIIB, Singapore's Ministry of Finance said in a statement on Tuesday.
A total of 57 countries have joined AIIB as founding members, including 37 from Asia, which is set to mainly finance major infrastructure projects in Asia. Shi Yaobin, China's vice finance minister, told a press conference on Friday that the AOA will be signed before the end of June.
"The founding members of the AIIB will likely discuss contributions, voting rights, and more specific issues like the operating mechanism, organizational structure and manpower, among others," Ma Tieying, an economist with Singapore-based DBS Bank, told the Global Times Wednesday.
Experts believe that China will have the largest share in the bank.
"Based on the AIIB members' GDP weight in the world economy, China will become the bank's largest shareholder, followed by India and Russia," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times Wednesday.
China is likely to have a 30.85 percent share in the bank, followed by India with 10.4 percent, Business Korea reported on April 28.
"Whether measured by nominal GDP or the purchasing power parity-adjusted GDP, it makes sense for China to be the biggest capital contributor and the most influential decision maker among all the Asian members," Ma said.
Some consensus has been reached during previous meetings since the signing of the memorandum of understanding on establishing the AIIB in October 2014, but with the latest entry of some non-Asian countries, the meeting will also discuss their requests, Huang Wei, an expert under the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, told the Global Times.
Philippine finance chief Cesar Purisima said on Wednesday that China has proposed allowing non-Asian countries on the AIIB board, a move interpreted as giving small shareholders a voice in the institution, Reuters reported.
The planned governance mechanism includes a provision that prevents any country from having more than one seat on the 12-member board of directors, Purisima said. "That helps the smaller countries."
Ma noted that there might be some divided opinions regarding the percentage of capital subscription and the distribution of voting power between the Asian members and non-Asian members.
"It is possible that the bank's non-Asian members will also attempt to seek a share of about 30 percent, in order to exert significant economic and political influence in Asia," Ma said.
Voting rights are likely to be another hotly discussed topic, because there have been discussions on these rights in other multinational financial institutions such as the IMF and the World Bank, according to Huang.
Zhou Qiangwu, chief executive of the Asia-Pacific Finance and Development Center, a think tank under China's Ministry of Finance, said the voting power of AIIB members is a complicated process.
"It will be based on the shares they hold at the AIIB. But their actual paid capital to the AIIB will figure prominently in determining their voting power," he told the Global Times in an interview earlier this month.
Japan has yet to decide whether to join the AIIB. Instead, it is expected to announce a $100 billion plan this week for roads, bridges, railways and other infrastructure projects in Asia, AFP reported Wednesday.
"Japan remains cautious about joining the AIIB, but it also does not want to give up business opportunities in Asia's huge infrastructure market," she said. "Both the AIIB and Japan's plan will complement existing international lenders and help bridge the infrastructure funding gap in Asia."
