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Dong-ik Lee, director-general of investment operations at the Asian Infrastructure Investment Bank in Beijing, tells Adrienne Klasa about its projects in frontier markets that will boost infrastructure and build sustainable cities.

Q: The Forum on China-Africa Cooperation [Focac] was held this September in Beijing. Will the Asian Infrastructure Investment Bank [AIIB] take part in the $60bn development finance that president Xi Jinping pledged to African countries over the next three years?

A: AIIB is not exactly a Chinese policy bank; we are a multilateral bank like the World Bank or International Finance Corporation [IFC]. [Focac] is a very important event, we are very interested in it. The Chinese national agenda is very clear and it is very important, but that doesn’t mean we are directly related to it. We are making our infrastructure investments regardless. 

In Africa, a lot of [countries] are our members, [even though] they are not our regional members. We always look for quality projects in infrastructure, in power, and if there are any projects in Africa that would qualify we will be very happy to be involved, and if there are any that fall under the [Focac] initiative, that would be wonderful.

We are in Beijing, it is great to see this kind of event, but we have our own balance sheet and we usually concentrate on Asia. This is a great initiative, it gives us more opportunity to get exposure to regions such as Africa.

Q: Would you be interested in co-investing with Chinese policy banks on these pledged projects?

A: Absolutely, if there are any great opportunities for co-investment. We [welcome] Chinese policy bankers and we are open to working together. But these potential investments have to fall within our own mandate and standards, such as environmental and social issues and procurement policies. We have our own strategy [and] we need to serve our own members.

Q: AIIB is a relatively new development bank. Where do you plan to expand your work?

A: We are a regional bank, so naturally our members and shareholders expect us to primarily be focused on the Asian region. Our region [of focus] is different to other multilateral development banks; [we go] from Turkey all the way up to Russia, and all the way down to south Asia and south-east Asia, [and then up to] Hawaii and even Australia. Countries such as India, Malaysia and Vietnam – [where] there is a large, fast-growing need for investment because there is a large infrastructure gap – are our focus areas. We are expanding our exposure to countries such as Russia and Turkey. We will continue to expand our regional base, but we have to focus on Asia.

Q: Why expand into Turkey and Russia now?

A: Turkey is a big economy regardless of its current economic situation. We have a long-term view and once you start a project it takes time for it to fully develop. Russia is another one of our major members, one of the biggest founding members and one of the largest shareholders. It is natural to seek opportunities in Russia. There’s no particular agenda in terms of politics. It fits what is needed in our region. Our investment decisions are purely financial and quality based.

Q: The AIIB is looking to get more involved in investing in 'sustainable cities'. What kinds of projects are you looking for?

A: Industrial parks, power generation for sustainable cities and toll roads are the kinds of investments that can deliver cash flow and have clear investment benefits. Transmission, power lines, broadband and power providers are also very interesting for us. Getting into real estate is not part of our immediate plans – we are not in [that] business, although a lot of private sector players are interested.

Q: Have you co-invested in projects alongside other development banks?

A: We have a few projects in India and the Philippines with the World Bank, the IFC and the Asian Development Bank. We have a very close relationship and seek to co-invest with them. We split the work and the roles. We are mostly dealing with the emerging and frontier markets, and these cases are ideal for mobilising the private sector. If I am from the private sector, I’m not going to go there without a multilateral development bank as support. That’s the kind of area where we can be helpful.

This article is sourced from fDi Magazine
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