Philippines continues to seek ratification of AIIB participation

MANILA, Philippines - The Philippines will continue to seek ratification of its participation in the China-led Asian Infrastructure Investment Bank (AIIB) which has vowed to remain impartial despite current political tensions between the two countries.

“There are no changes in plans to seek the Senate’s ratification of the agreement,” Finance Secretary Carlos Dominguez told The STAR in an e-mail.

For its part, AIIB said its lending rules would not be affected by the recent arbitration ruling in the West Philippine Sea, emanating from a case filed by the Philippines which China rejected.

“AIIB is an apolitical organization established to promote economic growth in Asia through sustainable investment in infrastructure,” said Song Liyan, the organization’s senior communications officer.

“The bank may provide or facilitate financing to any member,” he said in a separate e-mail.

Manila became the last signatory to the AIIB Articles of Agreement last year after then president Benigno Aquino III ordered a study on possible implications of the membership.

The country has until Dec. 31 this year to ratify the agreement. Aside from the Philippines, only nine of 57 member-countries have not ratified the pact.

In his e-mail, Song quoted Article 31.2 of the AIIB agreement, which stated that the Beijing-based bank and its officers “shall not interfere in the political affairs of any member.”

“Only economic considerations shall be relevant to their decisions. Such considerations shall be weighed impartially in order to achieve and carry out the purpose and functions of the bank,” the article stated.

Sought for comment, Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said AIIB could help finance plans for higher expenditures and deficit of three percent of economic output.

“I am sure the Duterte administration would want to have an alternative source of funding, especially for infrastructure,” Neri said in a phone interview.

“This is especially true with their plans to increase spending and widen the deficit. AIIB can help finance that,” he added.

AIIB was established presumably to rival the Washington-led World Bank and European-chaired International Monetary Fund in the global arena.

Once the agreement is ratified, the Philippines would need to contribute $196 million, payable in five years, to the institution’s $100-billion capital stock.

In terms of voting power, Manila will get 12,821 votes, equivalent to 1.11 percent of AIIB membership.