Infrastructure development can't be done locally, says AIIB

The panel stressed on the importance of both hard and soft infrastructure to boost cross-border trade and relations

Infrastructure development cannot be done locally and multilateral development banks can play a huge role here by improving connectivity between countries, said panellists at third annual meeting of the Asian Infrastructure Investment Bank (AIIB).

The panel, which comprised of senior finance ministers in Asia and senior executives of multilateral development banks, stressed on the importance of both hard and soft infrastructure to boost cross border trade and relations.

“Growing nationalism protectionism is a huge problem and a barrier to cross border facilities,” said D J Pandian, Vice President, AIIB.

“Infrastructure development is not domestic issue. It is easier to be undertaken when they(infrastructure project) are part of wider international economic framework,” said Teresa Czerwinska, Minister of Finance and AIIB Governor, Poland.

“Connectivity requires multilateralism. MDBs enjoy unique advantages in pushing global infra agendas,” said Jiayi Zou, Vice Minister of Finance, China. 

However, Improving connectivity across Asia faces many challenges, even as China has engaged in such a project through its ambitious Belt and Road Initiative (BRI). India is not part of the BRI, which aims to connect old Silk-Route neighbours together for faster travelling of goods from East to the West. 

Suma Chakrabarti, President of the European Bank for Reconstruction and Development said to connect Asian countries together, only hard infrastructure development won’t suffice. The countries need to develop soft infrastructure, such as trade facilitation, strong links between stock exchanges, simplification of custom clearance and easy freight charges. 

The BRI project of China, is focused on improved connectivity in terms of policy, infrastructure, trade, financing and people. The BRI initiative depends on three key pillars – consultation, collaboration and shared benefits.

“To connect Asia together, China would strongly encourage multilateral development banks to provide long term financing. MDBs should use many innovative products, instead of the traditional mode of issuing bonds for the countries taking loans. To connect Asia together, every country must become innovative and “open minded” in their approach,” Zou said.

“Connectivity requires long term finance. MDBs can play the role of financial intermediary to channel finance to infrastructure projects all over the world,” she added.

“Inclusive in connectivity is very important. It should boost trade in both directions and not create any imbalance,” said Czerwinska.