The Asian Infrastructure Investment Bank (AIIB), proposed by Chinese President Xi Jinping and Premier Li Keqiang when they visited Southeastern Asian countries in October of 2013, is being seen as a threat to the Asian Development Bank's dominance in this region. The dominance of the US and Japan over the World Bank and the ADB has prompted China to take such an initiative. Experts think that it is possible to operate such a kind of bank successfully in Asia due to gap between the need of investments and the capacity of the ADB to lend. According to an estimate of the ADB, Asia's developing economies need to invest US$8 trillion in 10 years (2010 to 2020) to meet the growing needs of infrastructural development. Thus, the AIIB can be a trusted lender augmenting competition over investment in Asia.
As per the aim of the bank, infrastructural development will be its top priority. China also has declared to build the historic Silk Road, which will link China with European countries directly. This endeavour has some important implications for Bangladesh.
Over the last five years, Bangladesh has gone through a massive infrastructural development compared to the past and this has been continuing till date. The present government's priority for developing infrastructure needs a number of issues to be resolved. The first prerequisite is political stability to ensure good governance and the second and most important one is to provide big investment money in the sector. According to a World Bank report published in April this year, Bangladesh needs to invest $7.4 to $10 billion per year in developing infrastructure.
Political stability and a sound economy depend on each other. An unwavering political system is not possible until literacy rate increases and the mindset of politicians is changed. Bangladesh by and large depends on various agencies like the WB and the ADB for investment in the sector. The country relies on some countries like China and Japan as well. These sources are not always suitable for Bangladesh's needs since the country has no influence in the decision-making process of the WB and the ADB. In this case, Bangladesh is in need of a source, where the country can at least have a say. The AIIB may be the perfect one. The rejection of the loan by the WB for the Padma Bridge project is an example of the country's helplessness. Was corruption the only cause for the WB to suspend the huge loan? Do other projects of the WB run in a completely transparent way? There are analysts who say 'no'. These show that some countries' dominance over the WB did not let the project start.
Another problem is the rules fixed on the loans. The rules or terms are not always compatible with Bangladesh's economy and geopolitical setting. This is also true for some other developing countries across Africa and Asia where the Structural Adjustment Programmes (SAPs) are highly criticised. The AIIB also will not lend money without terms and conditions, but there will be some divergences between the terms of the AIIB and those of the ADB/WB, if Bangladesh becomes one of the founding members keeping the historically good ties with China.
Chinese investment in Bangladesh's export processing zones (EPZs) and in other mega infrastructures and aid have laid the foundation of good bilateral relations on a sound footing economically and politically. Bangladesh's geopolitical reality also offers China opportunity to increase its influence on this region and the historic Silk Road linking China and Bangladesh through Myanmar will pave the way. Since the restoration of the Sino-Bangladesh relations in 1975, China has been a major trade partner of Bangladesh. In 2013, Bangladesh-China trade volume reached 10.3 billion US dollars. As things go, China has a buoyant and interest-based relation with Bangladesh. It will always be on Bangladesh's side as far as investment is concerned. Here Bangladesh has a choice to apply the policy 'give one and take ten' while working with China in initiating the AIIB. An added cause for being on the side of Bangladesh is China's thirst to be a global power. For that, it needs a regional helping hand and to make sure Bangladesh is on China's side it must help the former in a competitive manner, since the American (WB and ADB) loans and aid are also there as the other options.
Future of the AIIB largely depends on how member-states cooperate and on keeping up ties with the WB and the ADB. It has been assumed that the bank will increase competition over infrastructural investment in Asia. The ADB has already warned that it will not cooperate if the AIIB fails to keep quality up to the standard. This kind of precautionary warning surely will augment competitive measures. Bangladesh should never see AIIB as an alternative to ADB/WB, rather the country should keep it at hand. Establishment of the Bank of the South by Latin American countries in 2009 was also aimed at trimming the dominance of the IMF and the WB in the region and Hugo Chavez made endeavours to completely withdraw them from the IMF.
Making decisions for Bangladesh sitting in Washington will surely not be well-focused on the ground reality here. Bangladesh has a different political, geographical and economic setting compared to other developing countries. So policies also must be different. For instance, the WB policy of increasing income from welfare sectors by themselves-education is one of examples-does not go well with Bangladesh. To bypass these kinds of policies Bangladesh should speed up collaborative actions with regional powers that will understand the real needs. Most importantly, Bangladesh will benefit from the AIIB on the ground that it will reflect the Asian perspectives.
The writer studies International Relations at the University of Dhaka.
 arfanulalam@yahoo.com
AIIB in Bangladesh perspective
SMR Arfanul Alam | Published: July 19, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
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