PH defers joining China-led bank

Even as the Philippines did not sign on Monday the articles of agreement for the establishment of the China-led Asian Infrastructure Investment Bank (AIIB), Finance Secretary Cesar V. Purisima said on Monday that the country “remains a prospective founding member.”

“As the deadline to sign is on December 2015, the Philippines is taking the time given to prudently consider its membership. Not signing today does not preclude us from signing before the aforementioned deadline,” Purisima said in a statement.

According to sources, about 50 countries were expected to sign the AIIB’s articles of agreement in Beijing during ceremonies on Monday.

Aside from the Philippines, other prospective members that have yet to sign the articles of agreement were Denmark, Kuwait, Malaysia, Poland, South Africa and Thailand, sources said.

Last week, Purisima said the Philippine government has “concerns about the governance of AIIB,” while also awaiting the bank’s bases for granting loans.

“We do hope that AIIB will function based on purely financial basis, and not political,” Purisima said at a Center of Strategic and International Studies (CSIS) conference in Washington, D.C.

The Philippines and China are in the midst of a dispute over a number of islands and rocks lying in South China Sea or what Manila calls West Philippine Sea.

Philippine officials had said the territorial row should not be a hindrance as far as the country’s possible membership in AIIB was concerned.

Last October, the Philippines, through the Department of Finance (DOF), signed a non-binding agreement to join discussions aimed at threshing out issues ahead of the bank’s formal establishment.

The China-backed lender is being seen as a possible alternative to the mainly US-backed financial institutions.

According to Purisima, the Philippines is still looking closely at the composition of AIIB’s board of governors, as well as the bank’s “fine print.”

The DOF has said it recognizes that AIIB has “great potential to contributing to social and economic development in the region.”

An official familiar with AIIB negotiations earlier said that prospective member-countries have to commit to join no later than the end of this year.

Prospective members then have until next year to actually become a member by contributing to AIIB’s capital

The Philippines may have to shell out about $900 million or over P40 billion, about 1 percent of the $100-billion capitalization requirement for the bank.

The amount would be subscribed capital, of which only a fifth will be paid up, payable in five years, a source had said, citing proposals during recent meetings in China and Singapore.

The Philippines’ membership in AIIB would also be subject to the availability of budget for the contribution to the capital, as well as Senate ratification.

China aims to start the lender’s operations in January next year, during which it must have over half of the required capital.