April 25, 2024

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[THE INVESTOR] The second annual meeting of the Asian Infrastructure Investment Bank opened in Jeju on June 16, with Korean President Moon Jae-in echoing the organization’s emphasis on the dual goals of economic growth and environmental protection.

“What the AIIB pursues in its investment direction goes well with the ways that the Korean government seek to achieve economic growth,” Moon said in his congratulatory address in front of more than 2,000 participants, including ministerial-level officials, business leaders and academic researchers and professors from 77 countries.

The AIIB meeting was the first international event held in Korea since the Moon government was inaugurated last month.

With three new countries announcing their memberships as of June 16, the AIIB now boasts 80 member nations, larger than the Asian Development Bank with 67 nations led by Japan.  

“Infrastructure investment should contribute to environmental sustainability,” Moon said. “To join the global moves, Korea is preparing to expand its use of renewable energy to up to 20 percent of total power generation by 2030, while reducing coal-fired power generation and becoming a non-nuclear country.”

Infrastructure investment should also contribute to job creation, Moon stressed, saying “Korea’s new government is putting ‘people-centered economy’ at the center of its economic policies in order to produce quality jobs.”

In a speech, AIIB President Jin Liqun also highlighted the urgency of establishing “quality infrastructure” for the sustainability of Asia, saying that building sustainable infrastructure is a shared objective of the member countries for the dual goals of economic growth and environmental protection.

Quality infrastructure pursued by the AIIB refer to those that foster economic growth while minimizing damage to the environment. And sustainability has become a pressing agenda of the international community, since the United Nations’ adoption of a new long-term development agenda in 2015. The UN Sustainable Development Goals have been recognized as the dominant paradigm of development and a key mandate of multilateral development banks.

“We should achieve the goals of economic development and environmental protection at the same time in the 21st century,” said Jin.

“AIIB is created to resolve challenges such as (the) infrastructure gap, rapid urbanization, (the) impact of climate change and environmental degradation.”  

Such challenges cannot be resolved by a single party, be it a government, company, or environmental organization, the AIIB president said.  

Founded in January 2016, the AIIB is a China-led multilateral financial organization that offers loans for infrastructure projects across Asia. It is often called the “World Bank for Asia.”

Kim Dong-yeon, deputy prime minister for economic affairs, elaborated Korea’s investment directions for sustainability at the event.  

“Investment decisions often aim to maximize economic benefits at the expense of environmental and social impacts,” Kim said. “An inconsistency between infrastructure policies and economic policies could diminish the impact of investment.”

Korea is currently the fifth-largest shareholder of the AIIB with a 4.06 percent stake worth 4 trillion (US$3.4 billion). 

The Ministry of Strategy and Finance said the government will donate an additional US$8 million for the bank’s special fund for preparations of infrastructure projects for developing countries this year.

Korea will be the second country to offer the financial donation for the special fund after China. 

AIIB President Jin expressed gratitude toward Korea’s offer at a bilateral meeting with Kim on June 15.

“The Korean government will share the country’s growth experiences through infrastructure investments with the AIIB,” Kim said. “Korea and AIIB can form a mutually beneficial investment partnership.”

During a forum held as part of the annual meeting, experts delved deeper into the urgent need for sustainable infrastructure in Asia.

Lord Nicholas Stern, a professor at the London School of Economics, said, “Urgency for having sustainable infrastructure is crucial in the next 20 years.”

“AIIB was created at a right time to tackle the challenges,” he said. “If not now, it will be difficult to reach the Paris goal.”

About 70 percent of carbon emissions are connected to infrastructure and about 70 percent of investment opportunities come from Asia, the professor said.

“We need a right kind of finance at a right time to turn these opportunities into real,” he added.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)