There is not enough investment for infrastructure in the developing world, but the demand for capital is huge. At the first annual meeting of the AIIB, officials and industry players discussed ways to align enthusiasm for investment with the best projects.
It's almost a no-brainer that infrastructure building will drive growth, but the past years has seen insufficient funding.
The problem, according to Chinese Finance Minister Lou Jiwei, is finding the right project.
"What we need is implementation. There is a large amount of money, such as pension funds that is willing to enter the low-risk and steady-return fields. That leaves the issue of how multilateral development banks should work with them. We suffer from structural barriers. Many institutions become hurdles to carrying out cooperation," Lou said.
Here at the first annual meeting of the AIIB, the message is that it is not a lack of capital or technology that hinders infrastructure development, but
Whether the projects are bankable. Panelists are discussing how to prepare projects, allocate risks, and engage more partners.
The private sector, for instance, says it's important for the government to carry out structural reforms and set up an eco-system so that the project can show its potential.
"If you want to do something about the railways, as you are developing the railways, what are you doing to ensure the feeder tracks are also getting developed? So it cannot be railways alone. You are developing a port. Are you developing the container yards, the railways that connect the port. So it has to be a very collaborative effort," Chairman of State Bank of India Arundhati Bhattacharya said.
Others are asking for a streamlined cooperation model.
"Less bureaucracy, the coordination between different government agencies. Public sector should make one stop services to make the express and fast track," Managing Director of Maxwell Stamp Syed Muruddin Ahmed said.
The situation varies from country to country. So it would certainly take some time and effort to find a replicable model to anchor a project that suits both social and economic needs.
The good news is that the efforts are progressing. The AIIB, for instance, has approved over 500 million US dollars in loans so far, and said it may surpass its annual lending target of 1.2 billion US dollars.
