The Senate has adopted on second reading a resolution, seeking its concurrence in the ratification of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB).
No senator objected when Senate Majority Leader Vicente “Tito” Sotto III moved to adopt on Tuesday Senate Resolution No. 241. The resolution has yet to secure the two-thirds vote of the members of the chamber before it becomes effective.
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A committee report on the resolution was sponsored on the floor by Senator Loren Legarda, who chaired the hearing of the Senate sub-committee on foreign relations for the AIIB Treaty.
Like the Asian Development Bank (ADB) and the World Bank, Legarda said, AIIB is a multilateral lending institution, owned by sovereign-member countries, which aims to promote economic development in Asia.
“It aims to foster economic development and promote regional cooperation,” she said in her sponsorship speech.
Legarda said the Philippines is the 57th prospective founding-member of the AIIB, the last to have signed on in December last year.
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“Forty-eight have already attained full membership, including Australia, France, Germany, India, South Korea, and Russia. All Asean (Association of Southeast Asian Nations) countries have signed on, with the Philippines and Malaysia as the only Asean countries that have yet to deposit its instruments of Ratification. We have only until December 31 of this year to make this submission and to pay our initial capital contribution,” she said.
The AIIB, she said, can provide an annual financing window to the Philippines around US$200 million to US$500 million.
“In the end, we can see a 400% to 1,150% return on investment of our required paid-in capital of US$196 million in five years,” the senator said.
Legarda said the AIIB membership would also bring in a host of benefits such as additional source of financing to implement better and resilient infrastructure and to support rural and value chain development to increase agricultural and rural enterprise productivity and rural tourism of the country.
It will also accelerate the Philippines’ annual infrastructure spending to account for 5% of gross domestic product, or even higher, and improve competitiveness through better infrastructure facilities that will attract investments into the country, she said.
She said among the benefits that the Philippines could get from its membership in the AIIB are increased opportunities for Filipino contractors/professionals for infrastructure projects in the country and abroad; more employment opportunities for Filipino workers due to heightened infrastructure spending; and reduced trade costs of about 15.6% of trade value and real income gain of about US$220 billion.
“Infrastructure bottlenecks have stifled our growth potential for many years. More investment is required not only to build new projects but also to maintain existing infrastructure. The AIIB can broaden our infrastructure funding source,” Legarda said.
“Let me underscore, however, that financing alone will not solve all our problems. Still, the fundamental issues have to be set right. We need to simultaneously create an environment with a predictable legal and regulatory framework, buttressed by transparent governance and decision-making processes.”
“Let us take, however, this crucial step to be part of the AIIB to help address one of the most pressing issues facing our infrastructure sector,” the senator added. RAM