MANILA, Philippines – The Senate is set to make a final vote next week on its concurrence to the Executive Branch’s ratification of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB), from which the Philippines can tap billions of dollars in funding for projects.
The Senate on Tuesday approved on second reading the report of the Sub-Committee on Foreign Relations for the AIIB Treaty after Sen. Loren Legarda sponsored it on the floor.
Legarda, who chaired the hearings of the sub-committee, said membership to the AIIB would help achieve the country’s growth targets through accelerated infrastructure spending.
“Development of infrastructure is crucial for enhancing our trade competitiveness. Resilient and adequate infrastructure will reduce the costs of trade and strengthen our competitiveness. These would impact on our future growth,” the senator said.
“Let us take, however, this crucial step to be part of the AIIB to help address one of the most pressing issues facing our infrastructure sector,” she said in asking her colleagues to concur with the ratification.
The agreement was ratified by former president Benigno Aquino III last February. It was also ratified by President Duterte last Oct. 19.
The AIIB is a multilateral institution that consists of 57 member countries, 37 of which are in Asia. It was formally established in November 2014 when 22 Asian countries gathered in Beijing to sign a memorandum of understanding on the bank.
It aims to boost lending for infrastructure projects in the Asia-Pacific region, including energy, urban construction, transportation and logistics as well as education and healthcare.
It has an authorized capital stock of $100 billion.
The Duterte administration has set aside P4 billion in the proposed budget for 2017 as the Philippines’ initial contribution to the AIIB.
‘’In the end, we can see a 400 percent to 1,150 percent return on investment (ROI) of our required paid-in capital of $196 million (P9.8 billion) in five years,’’ Legarda said.
‘’AIIB aims to supplement and not crowd out private sector financing since it wll focus on vital financing projects that are unable to avail of reasonable financing terms and conditions,’’ she said.
Legarda said the Philippines ranked 95th out of 138 economies in the 2016-2017 World Economic Forum’s global competitiveness index on infrastructure, highlighting how much the country has lagged behind other economies.
“The absence of good infrastructure – from road networks, transportation systems, airports and seaports, electrification, water supply, to telecommunications – has had dire consequences on our nation’s growth; above all, on our people’s well-being,” she said.
The World Bank estimates that a 10 percent increase in capital investment in infrastructure projects contributes to a one percent growth in GDP.
Citing a study by the ADB, the Department of Finance estimates the Philippines needs $127.12 billion from 2010 to 2020 for its infrastructure needs.