Duterte gov’t readies fund to join China-led AIIB

The Philippines is ready to join the China-led Asian Infrastructure Investment Bank (AIIB), with allocation in the proposed 2017 national budget for the paid-up capital contribution needed to become a member.

Officials said that even as only over three months remain before the deadline, the Philippines still has ample time to secure its membership in the AIIB.

In a statement Tuesday, the Department of Finance (DOF) noted that the Bureau of the Treasury’s budget for next year almost quadrupled to P6.461 billion, in part due to capital subscriptions to foreign financial institutions, including the AIIB.

The Lower House’s committee on appropriations Monday night endorsed for Congress’ approval the DOF’s P21.3-billion budget for 2017, up from this year’s P18.4 billion in appropriations mainly due to higher salaries of personnel under the second tranche of the Salary Standardization Law.

To become an AIIB member, the Philippines must shell out $196 million, payable in five years or $39 million (over P1.8 billion) per year, as indicative paid-in capital.

Members must pay the initial tranche of their respective contributions by yearend.

For the contribution needed to be shelled out this year, the Department of Budget and Management had said the initial instalment can be paid out of the P4-billion contingency fund under the 2016 budget.

“Ratifying our membership in the AIIB is a priority agenda,” Department of Foreign Affairs spokesperson Charles C. Jose said in a text message.

“The Senate is aware of the December deadline for us to submit our ratification papers, and had indicated that they will prioritize this,” Jose added, referring to the Senate foreign relations committee headed by Sen. Alan Peter Cayetano.

National Treasurer Roberto B. Tan agreed that there was time for the Senate to ratify the country’s AIIB membership.

In a recent meeting, Chinese embassy officials urged the DOF to fast-track work on the Philippines’ membership in the AIIB.

“The Chinese ambassador expressed appreciation that the Philippines is taking steps to complete procedures in its membership with the AIIB. The ambassador reiterated the need to complete all steps for full membership in the AIIB so the Philippines can access project financing to support its infrastructure requirements,” the DOF had said, referring to Chinese Ambassador to the Philippines Zhao Jianhua.

The Philippines’ AIIB membership remained pending as it still needs Senate ratification. The country still has until yearend to secure Senate approval to become a founding member.

Finance Secretary Carlos G. Dominguez III earlier said that the Duterte administration would speed up the Philippines’ membership in the AIIB to widen financing options in line with plans to ramp up infrastructure development.

On Dec. 31 last year—only a day before the deadline—the Philippines announced that it would become a founding member of the AIIB, which aims to finance developing countries’ infrastructure needs. Pundits say the AIIB is seen to rival other multilateral lenders such as the World Bank and the Manila-based ADB, which are led by the United States and Japan, respectively.

Dominguez had said the DOF “will do its part to work closely with the bicameral committees involved in studying the benefits the Philippines will acquire by signing as members to the AIIB.”

“The Duterte administration will definitely pursue joining the AIIB as at the forefront of the incoming administration’s socioeconomic agenda is to increase infrastructure spending in the country … With traffic and the lack of basic infrastructure projects being hindrances to Philippine economic prosperity, the membership of the Philippines to the AIIB—an infrastructure-lending bank, is surely something that the people will benefit from,” according to Dominguez.

The administration wanted to raise the share of infrastructure spending to the gross domestic product (GDP) to as much as 7 percent by 2022.