Cambodia eyes AIIB loan

KHMER TIMES
MAY KUNMAKARA

A worker installs a sign of the Asian Infrastructure Investment Bank at its Beijing headquarters. Reuters

Cambodia will begin applying for a loan from the newly established China-backed Asian Infrastructure Investment Bank (AIIB) from next year in response to the current need for infrastructure development.

Visiting AIIB vice president and chief investment officer D.J. Pandian met with Vongsey Vissoth, secretary of state at Cambodia’s Finance Ministry, on Tuesday at the ministry.

The AIIB is focused on supporting infrastructure development in the Asia-Pacific region. It was proposed by China in 2013 and launched at a ceremony in Beijing in October 2014. Cambodia, along with 49 other prospective founding members, signed the Articles of Agreement on June 29, 2015, in Beijing.

Mr. Pandian said his visit was to follow up on cooperation between the bank and Cambodia, especially to learn about the country’s need for infrastructure development and other potential projects to see if the Cambodian government wanted to apply for a loan.

Mr. Vissoth said the AIIB would play a very important role in providing infrastructure funds to the region where needed for economic development and poverty reduction.

“Right now, Cambodia has yet to set the policy to apply for a loan from the AIIB. But, Cambodia will double check and evaluate its borrowing potential,” he said.

“In 2018, when the country is preparing the public debt strategy for 2019-2023, the country will be able to take a loan from the AIIB to fulfill the huge need for infrastructure development and other sectors to boost the economy.”

A joint survey by the Japan International Cooperation Agency, World Bank, International Monetary Fund and Asian Development Bank in 2011 indicated that Cambodia needs an estimated $13 billion investment in infrastructure works by 2020 if the country intends to continue attracting foreign investment.

The survey also called for $1.2 billion in infrastructure spending per year in Cambodia, with about half going to new projects and the other half to maintenance.

According to the kingdom’s 2017 Budget Law, Cambodia will still be able to take foreign loans in the amount of about $700 million in special drawing rights this year which is the same as last year.

At the end of 2015, the country’s foreign debt was some $5.6 billion or below 40 percent of GDP.

Chheang Vannarith, chairman of the Cambodian Institute for Strategic Studies said previously that the AIIB would improve connectivity among Asian countries, especially in the Mekong region.

“The AIIB plays a complementary role to the Asian Development Bank led by Japan and the World Bank led by the US,” he said.

“These three international development and financial institutions need to work closely and coordinate their development projects in order to optimize their impact and generate greater positive changes.”

Mr. Vissoth, the Finance Ministry secretary of state, said Cambodia would take the opportunity to work with the AIIB to improve development of the country.

He also suggested the AIIB provide technical assistance in preparing a master plan on power development to ensure a stable supply of electricity and make costs more affordable and competitive.