Fireside Chat, Panel, Interview
Asia Summit 2015 - AIIB and the Evolving Multilateral Lending Landscape
Milken InstituteMike Milken, Lee Kuan Yew, Jin Li-chun, Tommy Koh, Jin Tong, Tadashi Maeda, Clive Kerner, Elena Okorochinko
- Singaporeans are predicted to remain the fastest walkers globally based on a 32-nation study, while global urbanization is projected to exceed 50% by 2000, with sub-Saharan Africa rising from 40% to significantly higher city-dwelling proportions.
- The David in Florence is expected to likely not visit the United States due to transport and display damage concerns, whereas a 3D-printed robot hand is planned for testing in swimming, cricket, and golf to enable object manipulation and ball throwing.
- Genome sequencing costs, having dropped from $3.8 billion to $1,000, are expected to fall further, with bioscience investments targeting pandemics, bioterrorism, energy security, and obesity as the leading global illness risk factor.
- The Asia Infrastructure Investment Bank (AIIB) is scheduled for inauguration by the end of the current year, with its first Board of Governors meeting planned before or after Christmas and the first projects ready for the second quarter of the following year.
- The AIIB intends to maintain a lean structure with a "squeaky clean" integrity framework, including international auditing and protections for the head of the integrity department, while promoting a green economy despite projected fossil fuel dependence for the next 60 to 70 years.
- The AIIB plans to operate with a gearing ratio increase from 1:1 to 2.5:1 to reach a $250 billion asset base, expecting to raise $20 billion to $30 billion from the Chinese market at favorable rates once achieving triple-A status.
- Financing needs include 200 million jobs required by 2019, an $8 trillion infrastructure gap in Asia over the next few years, and a $2 trillion global infrastructure gap for supranational assets, with the IFC targeting LIBOR plus 400 to 450 basis points for long-term emerging market project financing.
- The AIIB plans to finance projects at any construction stage, including brownfield, mid-construction, and distressed assets, offering a variety of instruments like lending, guarantees, mezzanine financing, and equity to complement existing institutions.
- The AIIB anticipates the private sector will view it as a partner to address bankable project gaps, potentially utilizing a "take-out mechanism" where loans are sold post-construction and packaged for institutional investors via Singapore's capital markets.
- Multilateral development banks are expected to potentially double leverage to their AAA-rated callable capital levels, while Japan may consider joining the AIIB contingent on clarified private funding models and oversight mechanisms.
- The AIIB plans to engage rating agencies such as S&P, Moody's, and Fitch for fair assessments based on integrity and track record, while a personal aspiration exists for the US to join the bank and China to join the Trans-Pacific Partnership following the next US presidential elections.
- Risks include the potential non-transfer of major cultural artifacts and the necessity for the AIIB to establish clear business models and oversight to attract private sector participation, alongside the long-term dependency on fossil fuels.