South Korea on Thursday joined the China-proposed Asian Infrastructure Investment Bank, or the AIIB, as one of its prospective founding members, the country’s finance ministry said.
The Ministry of Strategy and Finance said in a statement that the South Korean government made the decision after discussing the issue with related ministries, before notifying China.
If South Korea is allowed by other prospective founding members to join the AIIB, the country is expected to sign a formal agreement in June, the ministry said.
The newly-launched multilateral development bank aims to help finance infrastructure projects in Asia for sustainable growth and social development in the region, the ministry said.
According to the Asia Development Bank data, Asia’s infrastructure demand is expected to reach $730 billion per year by 2020, but the supply of investment funds from the World Bank and the ADB falls far short of the demand.
China proposed the creation of the AIIB to strengthen economic and financial cooperation among countries in the region and pioneer economic development in the region by focusing on providing needed funds amid a complementary relationship with existing multilateral development banks, the ministry said.
“In case that the AIIB is effectively in operation, a large-sized market for infrastructure constructions will be open in Asia, ” the South Korean statement said. “By joining the AIIB, our companies will have greater chances to participate in the projects as the companies have many experiences in infrastructure projects such as construction, communications and transportation.”
The ministry said that South Korea needs to play a more active role commensurate with its economic status in the international community and that the AIIB would become an important tool to expand the country’s domain in a financial diplomacy.
The South Korean government will work to make the AIIB contribute to global economic development by helping to set high-level standards in line with existing multilateral development banks with responsibility, transparency, governance, and debt sustainability, the ministry said.
The new bank is expected to be established by the end of 2015, with an initial subscribed capital of $50 billion and an authorized capital of $100 billion.
Twenty-one countries, including China, India, and Singapore, signed a memorandum of understating in Beijing in October 2014 to build the AIIB. Six other nations, including Indonesia and Saudi Arabia, joined the body in February.
In March, six other European countries, including Britain, Germany, France, and Italy, applied to jointly establish the bank as founding members. The application deadline is March 31.
Story by Xinhua News.