CAMBODIA holds back on AIIB loans

Sok Chan / Khmer Times No Comments Share:
President of the Asian Infrastructure Investment Bank Jin Liqun at a news conference in Beijing. Reuters

Cambodia has yet to set its loan application policies to borrow funds from the Asian Infrastructure Investment Bank (AIIB) because the country can still get highly concessional rates from development partners, Minister of Economy and Finance Aun Pornmoniroth said.
Mr Pornmoniroth said at a meeting with AIIB president Jin Liqun at the sidelines of the World Economic Forum on Asean, on Friday, that Cambodia would apply for a loan from the China-supported bank if it was needed but the country had to double check and evaluate its borrowing potential.
He said public-private partnerships would be a good mechanism to benefit from the AIIB because the bank would obtain investment capital from the private sector to develop the country and would not burden the country with public debt.  
The AIIB focuses on supporting infrastructure development in the Asia-Pacific region.
It was proposed by China in 2013 and launched 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 Liqun said he acknowledged the benefits to Cambodia of highly concessional loans from development partners.
This, along with solid strategies to manage public debt, meant it was not necessary to apply for loans from the AIIB, he said.
“However the AIIB was willing to cooperate with the Cambodian government not only on poverty reduction, but also on infrastructure development and the high productivity sector to back economic growth and boost living standards.”
Mr Liqun said Cambodia had the potential to draw on the private sector in areas such as rural infrastructure development, including road and irrigation systems, agro-industry and processing, and transport areas such as road connectivity and electrification.
A joint survey by the Japan International Cooperation Agency, World Bank, International Monetary Fund and Asian Development Bank in 2011 indicated that Cambodia needed an estimated $13 billion investment in infrastructure by 2020 to keep attracting foreign direct 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.
Joachim Von Amsberg, vice-president, policy and strategy of AIIB, said at the WEF on Asean that the bank was discussing priority projects with the Cambodian government and possible private investment.
“It is still in the very early stage so that I cannot announce any particular project or interest,” Mr Amsberg said.
“We have already made investments in Myanmar and Indonesia.
“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.”
As of December 31 last year, Cambodian had a total public debt of $5.8 billion of which 0.05 percent or $2.74 million was public domestic debt and 99.95 percent or $5.8 billion was public external debt.
Chheang Vannarith, a visiting fellow at ISEAS – Yusof Ishak Institute in Singapore, 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.”

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