Legarda: Membership in AIIB Will Help Boost PHL’s Growth

Senator Loren Legarda said the country’s membership in the Asian Infrastructure Investment Bank (AIIB) would help achieve its growth targets through accelerated infrastructure spending.

Legarda, who chaired the Senate Committee on Foreign Relations’ hearing on the Articles of Agreement of the Asian Infrastructure Investment Bank, said, as the Duterte administration aims to increase infrastructure spending of up to 7% of gross domestic product (GDP), membership in the AIIB will give the country additional source of financing for major capital investment projects of the government and the private sector.

“While government financing remains a significant source of infrastructure funding, it is never enough. We can easily hit our targeted spending on infrastructure if we can avail of additional finance apart from the World Bank and Asian Development Bank (ADB), among others,” she explained.

Citing a study by the ADB, the Department of Finance (DOF) estimates that the Philippines needs US$127.12 billion from 2010 to 2020 for its infrastructure needs.

Moreover, the World Bank estimates that a 10% increase in capital investment into infrastructure projects contributes to a 1% growth in GDP.

“Other benefits touted for the Philippines include additional employment for Filipinos through projects funded by the AIIB in the country, reduced trade costs, and increased competitiveness and productivity,” Legarda said.

“Once the Senate concurs in the ratification of the AIIB treaty, we may avail of loans and grants for our infrastructure needs. But the National Economic and Development Authority (NEDA) should already prepare projects qualified for AIIB financing even as we in the Senate commit to approve this treaty before end of year,” she added.

The AIIB is a multilateral institution that consists of 57 member countries, 37 of which are in Asia. It was formally established in November 2014 when 22 Asian countries gathered in Beijing to sign a memorandum of understanding on the bank.

It aims to boost lending for infrastructure projects in the Asia-Pacific region, including energy, urban construction, transportation and logistics as well as education and healthcare. It has an authorized capital of US$100 billion and subscribed capital of US$50 billion.