Parliament approves Singapore’s AIIB membership

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SINGAPORE: Parliament has approved Singapore's move to become a founding member of the Asian Infrastructure Investment Bank. This means more opportunities are set to open up for local firms in development projects overseas.

The China-led multilateral organisation aims to provide financial support to spur projects in the region, and is slated to start operating next year.

What is in it for Singapore? This was a question posed as Parliament debated the Asian Infrastructure Investment Bank Act on Monday (Aug 17).

With the passing of the Bill, Singapore is set to contribute US$250 million (S$352 million) towards the Bank. It gives the country 0.48 per cent of total voting share in the organisation which is spearheaded by Beijing.

Non-Constituency Member of Parliament Lina Chiam asked: "Are we trying to set a precedent for all future international organisations dealing with money? The proposing ministry owes Parliament a clearer explanation as to why we need to accord this organisation the same level of privilege.

“Do they provide employment for Singaporeans or do they create a stronger financial ecosystem? Specifically, what additional benefits can this Chinese-originated entity provide for Singaporeans?"

The Finance Ministry explained that Bank membership creates opportunities for local companies seeking to tap Asia’s growth - for example, being able to participate in the Bank’s projects in the transport, water, logistics and urban development sectors, to name a few.

Senior Minister of State for Finance Josephine Teo said the Government supports partnerships between state-linked companies and small- and medium-sized enterprises to bid for infrastructure projects.

She noted: "As a member of this region, Singapore welcomes new initiatives that will promote greater infrastructure investment. Better infrastructure and connectivity will facilitate regional economic development, and in turn provide positive spin-offs for the Singapore economy."

Twenty per cent, or 50 million out of Singapore's US$250 million contribution is to be paid in over five equal annual instalments. The remaining 80 per cent will not be paid in, except when decided by the Bank's members in extraordinary circumstances.

This is similar to the practice in other international financial institutions.

A total of 50 countries have signed the Bank's Articles of Agreement. All countries in the Association of Southeast Asian Nations have joined as prospective founding members. Other players include major economies from Asia, the Middle East and Europe.

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SOURCE: Channel News Asia, 17/08/2015, http://www.channelnewsasia.com/news/business/singapore/parliament-approv...