All hands on deck: Multilateral AIIB working with other development banks to tackle climate change
Battling climate change needs both public and private financing, leveraged through multilateral development banks like AIIB, says its president, Jin Liqun. The Asian Infrastructure Investment Bank is working with World Bank, EBRD and other financial institutions to step up projects across the globe.
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00:00The Asian Infrastructure Investment Bank was set up in 2016 to promote broad-based economic and social development
00:08through investment in infrastructure and other productive sectors.
00:13AIIB is a multilateral development bank with its governance, practice, management similar to the World Bank, ADB, EBRD, all those development institutions.
00:27You're at your annual meeting in Uzbekistan this month. What do you aim to accomplish during that annual meeting?
00:33At the invitation of our member Uzbekistan, one of the most important partners of this bank,
00:41we have the annual meetings and are focused on some of the major issues faced by development banks.
00:51We would send a strong signal to the outside world that we are here gathering together to discuss important issues such as
01:03how can we promote green economy and sustained development?
01:08How could we promote digital-based connectivity?
01:13And how could we push for regional cooperation and global integration?
01:20We aim at building infrastructure in a wider sense of the term.
01:26For instance, digital infrastructure, which is very much important, and also, for instance, cross-border connectivity,
01:35which means the infrastructure is not simply for the purpose of improving the infrastructure system within connectivity within one country.
01:44What is most important for us is to promote regional connectivity through cross-border connectivity.
01:53To give you one example, we financed a rural road in Cote d'Ivoire, an African country far away from Asia.
02:02And this rural road could link the people, farmers in remote mountainous areas,
02:10and help them ship their agricultural products out of their village and be shipped to the Abidjan port and all the way to Vietnam.
02:21Vietnam is a very important country to process cashew.
02:27Mobilizing private sector investors to sustain the development through investment in infrastructure is very much important.
02:36Now, there is one point I'd like to highlight.
02:40The private sector investors are certainly very much sensitive to risks.
02:46They would like to make sure that the investment they made in a particular country would be profitable or would not encounter major problems.
02:58Sometimes this is because of the business cycle, sometimes because of the policy issues.
03:07Sometimes the neighboring environment for private sector investment needs to be improved.
03:13That is why, in order to help individual private sector investor projects to be done in our client countries,
03:24we have recently approved a climate-focused policy-based lending.
03:31The idea is to improve the macroeconomic regulatory environment of the countries,
03:38so that private sector investors would feel more comfortable investing in a particular country.
03:45Can you give us a concrete example of that, a for-instance, briefly?
03:49For instance, we recently approved climate-focused policy-based lending to Bangladesh to promote private sector investment in green economy.
04:03It is very much important to note that the neighboring environment of any developing country is crucial for their green economy.
04:16This is the first project we are working on after the board approved this policy lending.
04:24It's not simply a policy lending, cutting a check, giving the money to the government.
04:29No, we focus very much on what kind of things the government would have to do to improve the neighboring environment.
04:36You invite some private sector investors to do a green solar panel project.
04:41What is the transmission like?
04:43Normally, it would be a long-distance transmission.
04:47Yesterday, we brought a board to visit in Uzbekistan a solar panel project.
04:55This project is 240 megawatt, which can provide power to 264,000 households and reducing the emission of carbon dioxide every year by 270,000 metric tons.
05:17As you know, solar power plants need to have vast land.
05:23This project takes 40 hectares of land, so it will be in certain areas where the land may not be the best for farming, so you can do it solo.
05:35And you need a transmission out of this area to those areas where electricity is needed, so we can reduce the blackout, brownout.
05:45We can reduce the coal-burning power generation.
05:49Do you aim to compete with other MDBs or what about partnerships with them?
05:55And I'm aware that you do have partnerships with other multilateral development banks like World Bank, right?
06:03There is a vast need for development financing.
06:09And when all of the development, more MDBs put their resources together, still way below what is needed.
06:19As you may know, over the last couple of years, all of the MDBs have closed ranks and we have heads of MDB meetings at least twice a year, more than that.
06:33We lay our heads together, working on the cooperation, collaboration.
06:41We co-financed a lot of projects with other institutions.
06:47For instance, with ADB, we financed quite a big number of projects.
06:53And with the World Bank, we co-financed projects.
06:57So, we are not competing with each other, we are working together as a system.
07:03We had a project, a $1 billion project to provide a guarantee to the World Bank's portfolio, so that World Bank could release its capital, recycle its capital to do new projects.
07:16And so far as AIB is concerned, we could improve the quality of our assets by the guarantee program.
07:26Thereby, we can do more in lower rated countries.
07:31So, the cooperation among the MDBs has been wonderful.
07:35We got triple rating from the three rating companies only 17 months into operation.
07:44And some people ask us the question, how could you do that?
07:4817 months into operation, you have no track record.
07:52Our answer is, first of all, the rating companies look at the governance.
07:59Our governance is similar to that governance of all the multilateral institutions.
08:05We have a board of governance, we have a board of directors, and a management.
08:10And secondly, the rating companies look at the team.
08:15The senior management are members.
08:19We have the executive committee, and also the way we process projects.
08:26We manage financing, investment of financial resources, and operations preparation.
08:32I'm the only Chinese in the executive committee.
08:37As we're talking about the chain of command there, your term ends in 2026.
08:43What do you hope to accomplish by then?
08:46And can you say who comes after you?
08:49I just had a high-fireside chat with the board this morning.
08:55And I told them I would continue to do my utmost in the remaining months of my time,
09:02of my mandate in this institution, roughly 15 months.
09:07I assure them I will continue to my very best to ensure the smooth transition.
09:14But as you know, we have the audience agreement indicating that the president should be an Asian national,
09:24and the president should be selected and elected on the basis of fair competition.
09:34It's merit-based.
09:36And it doesn't necessarily have to be a Chinese national, right?
09:40Because you've got a hundred countries there that are voting.
09:43The president must be an Asian national, Asian national, and selected on the basis of competition, open competition.
09:54The world has set ambitious goals in the next few years to cut emissions and fight climate change.
10:00And I know AIIB is working hard on that.
10:04But do you think we can make it?
10:06Will we hit the goal of trying to keep the global warming to 1.5?
10:12As a multilateral development bank, we do what it takes to promote financing for climate change mitigation adaptation.
10:22And as you know, I often highlight the point that when we finance infrastructure for tomorrow,
10:31it's not the infrastructure financing some people sold decades ago.
10:36We actually have infrastructure investment and climate financing be closely interlaced.
10:42When we finance mass transit systems, this is to reduce the emissions.
10:47When we finance renewables, power renewables, and power transmission,
10:54and all this kind of infrastructure projects would be conducive to transition to net zero for many of our countries.
11:03So this is what we are doing, and we are doing our utmost.
11:08I believe as long as all of the MDBs will continue to work as a system,
11:13as long as we can mobilize private sector resources, we can achieve the objective.
11:19I'm optimistic.
11:21Xinli Kun, Xie Xie, thank you very much.
11:24Thank you very much.