AIIB is willing to invest in cross-border projects in Asia: Najeeb Haider

Lending agency to debate on how to come closer to being the region's bank of choice for the segment

Asian Infrastructure Investment Bank (AIIB) is willing to invest on cross-border projects in Asia and beyond, says its principal investment officer, Najeeb Haider. Yet, in deference to India’s sensitivities, the Beijing-based lender has dropped any reference to such projects at its third annual meeting here (the earlier two were at Beijing and at Jeju in South Korea). 

“Connectivity is one of our thematic priorities. From our experience, we find however that as you cross borders, the complexity of the project increases and  governments have to step in,” he said in a freewheeling discussion with Business Standard, on the sidelines of the meeting of the multilateral organisation.

The bank is also circumspect, at this stage, about joining multilateral organisations like the International Solar Alliance or Shanghai Cooperation Organisation.

Asia has become the centre for mega trans-border infrastructure projects. Examples are China’s Belt and Road Initiative (BRI) and the India-supported International North-South Transport Corridor. However, AIIB has not financed any BRI or other similar project in Asia. This is due to the political concerns among countries, especially about China trying to shoehorn such projects.

An Asian Development Bank (ADB) estimate pegs Asia’s infrastructure need at $1.7 trillion annually till 2030. Of this, India expects to invest close to $200 billion annually, by a finance ministry estimate. Speaking at one of the sessions, ID

FC  Bank’s managing director and CEO, Rajiv Lall described India’s infrastructure investment plans as one of the largest ever attempted  in the world. 

Haider said, going ahead from Mumbai, AIIB wanted to deepen its own pipeline of projects, instead of piggybacking on older multilateral organisations such as the World Bank or ADB. “We want to be the bank of choice in the region.” 

Compared with Europe, he said, inter-country regulations are still getting standardised in Asia. “Large economies like India and China are spearheading those efforts, both by setting up connection in terms of hard physical infrastructure and that of soft infrastructure. We shall watch those developments, ready to provide finance whenever we can.”

Prime Minister Narendra Modi will address the session on Tuesday and Haider said they would look forward to an expression of deeper commitment by India to the bank. 

“We are a very apolitical organisation. That means we are very business focused—infra focused. So, any project we decide to finance has to satisfy several standards. Those include environmental and social standards, whether located in one country or across borders.” 

AIIB has a project pipeline of about $4 billion. Haider described this as very small, given the continent’s needs. The bank would eventually graduate to raising funds from the capital markets to finance its need but, he said, he could not say when.

AIIB has, like the ADB and World Bank, also been approached by upcoming international organisations, including the International Solar Alliance. “We are open-minded but would want to join a specific project than savour the theoretical advantages of such a body,” says Haider. 

Though the bank has the mandate to engage with both public and private sector entities, it is realistic that large infra projects beyond borders cannot be entirely led by the private sector. China has pushed its sovereign balance sheet to make those investments, while India is developing the National Infrastructure Investment Fund off its balance sheet for the purpose. 

“It is very hard to conceive, in the initial stages, any such project that is run entirely in the private sector. They would need sovereign support,” says Haider. He has spent a little more than two decades with CitiBank in HongKong, and is familiar with Asian economies. 

The other issue of concern for the infrastructure sector are the checklist on environmental and social issues. On Thursday, Mumbai saw events organised by a cross-section of non-government bodies, pressing for a deeper response from AIIB to their demands. In turn, the Bank has invited  civil society to attend its Mumbai session and has also organised two events on Monday where they shall be on the panels.

“It will be very unusual for there to be no response from civil society when infrastructure projects are built. We adhere to the highest standards of transparency to meet their expectations. Before we close any transactions we publish our findings on the web; so, overall, we deal with them very actively,” says the principal investment officer.