Philip­pines de­fers join­ing China-led bank

The China Post - - WORLD BUSINESS - BEN O. DE VERA

Even as the Philip­pines did not sign on Mon­day the ar­ti­cles of agree­ment for the es­tab­lish­ment of the China-led Asian In­fra­struc­ture In­vest­ment Bank (AIIB), Fi­nance Sec­re­tary Ce­sar V. Purisima said on Mon­day that the coun­try “re­mains a prospec­tive found­ing mem­ber.”

“As the dead­line to sign is on De­cem­ber 2015, the Philip­pines is tak­ing the time given to pru­dently con­sider its mem­ber­ship. Not sign­ing to­day does not pre­clude us from sign­ing be­fore the afore­men­tioned dead­line,” Purisima said in a state­ment.

Ac­cord­ing to sources, about 50 coun­tries were ex­pected to sign the AIIB’s ar­ti­cles of agree­ment in Bei­jing dur­ing cer­e­monies on Mon­day.

Aside from the Philip­pines, other prospec­tive mem­bers that have yet to sign the ar­ti­cles of agree­ment were Den­mark, Kuwait, Malaysia, Poland, South Africa and Thai­land, sources said.

Last week, Purisima said the Philip­pine gov­ern­ment has “con­cerns about the gov­er­nance of AIIB,” while also await­ing the bank’s bases for grant­ing loans.

“We do hope that AIIB will func­tion based on purely fi­nan­cial ba­sis, and not po­lit­i­cal,” Purisima said at a Cen­ter of Strate­gic and In­ter­na­tional Stud­ies (CSIS) con­fer­ence in Washington, D.C.

The Philip­pines and China are in the midst of a dis­pute over a num­ber of is­lands and rocks ly­ing in South China Sea or what Manila calls West Philip­pine Sea.

Philip­pine of­fi­cials had said the ter­ri­to­rial row should not be a hin­drance as far as the coun­try’s pos­si­ble mem­ber­ship in AIIB was con­cerned.

Last Oc­to­ber, the Philip­pines, through the Depart­ment of Fi­nance (DOF), signed a non-bind­ing agree­ment to join dis­cus­sions aimed at thresh­ing out is­sues ahead of the bank’s for­mal es­tab­lish­ment.

The China-backed len­der is be­ing seen as a pos­si­ble al­ter­na­tive to the mainly U.S.-backed fi­nan­cial in­sti­tu­tions.

Ac­cord­ing to Purisima, the Philip­pines is still look­ing closely at the com­po­si­tion of AIIB’s board of gover­nors, as well as the bank’s “fine print.”

The DOF has said

it rec­og­nizes that AIIB has “great po­ten­tial to con­tribut­ing to so­cial and eco­nomic de­vel­op­ment in the re­gion.”

An of­fi­cial fa­mil­iar with AIIB ne­go­ti­a­tions ear­lier said that prospec­tive mem­ber-coun­tries have to com­mit to join no later than the end of this year.

Prospec­tive mem­bers then have un­til next year to ac­tu­ally be­come a mem­ber by con­tribut­ing to AIIB’s cap­i­tal.

The Philip­pines may have to shell out about US$900 mil­lion or over 40 bil­lion pe­sos, about 1 per­cent of the US$100-bil­lion cap­i­tal­iza­tion re­quire­ment for the bank.

The amount would be sub­scribed cap­i­tal, of which only a fifth will be paid up, payable in five years, a source had said, cit­ing pro­pos­als dur­ing re­cent meet­ings in China and Sin­ga­pore.

The Philip­pines’ mem­ber­ship in AIIB would also be sub­ject to the avail­abil­ity of bud­get for the con­tri­bu­tion to the cap­i­tal, as well as Se­nate rat­i­fi­ca­tion.

China aims to start the len­der’s oper­a­tions in Jan­uary next year, dur­ing which it must have over half of the re­quired cap­i­tal.

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