Senate Concurs in Ratification of AIIB Treaty

The Philippine Senate on Monday concurred in the ratification of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB), said Senator Loren Legarda, who sponsored the Committee Report on the AIIB Treaty.

Twenty senators voted to approve the resolution seeking the Senate’s concurrence in the AIIB Treaty.

Legarda hailed the Senate’s approval of the Agreement, stressing that the Philippines’ membership to the AIIB would help achieve its growth targets through accelerated infrastructure spending.

“Infrastructure bottlenecks have stifled our growth potential for many years. More investment is required not only to build new projects but also to maintain existing infrastructure. The AIIB can broaden our infrastructure funding sources,” said Legarda.

The AIIB, like the Asian Development Bank (ADB) and the World Bank, is a multilateral lending institution, owned by sovereign-member countries, which aims to promote economic development in Asia.

The World Bank estimates that a 10 percent increase in capital investment into infrastructure projects contributes to a 1 percent growth in GDP.

Legarda explained that AIIB membership would bring in a host of benefits such as additional source of financing to implement better and resilient infrastructure and to support rural and value chain development to increase agricultural and rural enterprise productivity and rural tourism of the country. It will also accelerate the Philippines’ annual infrastructure spending to account for 5% of GDP, or even higher, and improve competitiveness through better infrastructure facilities that will attract investments into the country.

The Philippines is expected to also realize other benefits from its membership in the AIIB, such as:

• Increased opportunities for Filipino contractors / professionals for infrastructure projects in the Philippines and abroad
• More employment opportunities for Filipino workers due to heightened infrastructure spending
• Reduced trade costs of about 15.6% of trade value and real income gain of about US$220 billion

The AIIB can provide an annual financing window to the Philippines of about US$200 million to US$500 million.

Under AIIB’s lending policy, the private sector can likewise avail of services or products from AIIB such as guarantees, private equity investments, and co-financing with private banks.

The AIIB has already approved several projects including the National Slum Upgrading Project of Indonesia, Tajikistan’s road improvement project, Pakistan’s motorway and hydropower projects, Distribution System Upgrade and Expansion Project of Bangladesh, and a power plant project in Myanmar.