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The Asian region has experienced the emergence of new MDBs over last few years. For many years, the Asian Development Bank was the only development bank in the region and has been dominated by the Japanese owing to the number of votes it has as compared to other members. However, the newly constituted NDB in 2014 has two key Asian members, India and China. The Asian Infrastructure Investment Bank (AIIB) led and initiated by China in 2015, and with a mandate to have at minimum 70% of shares allocated to Asian countries is sure to become another major player to support infrastructure development activities of the region as well as global south. The AIIB and NDB are two separate entities in their operations and constitution even though there are overlaps in memberships of the two banks.
Skeletal of Himanshu Damle’s Presentation on AIIB and Blue Economy in Mumbai during the Peoples’ Convention on 22nd June 2018
Main features in AIIB Financing
- investments in regional members
- supports longer tenors and appropriate grace period
- mobilize funding through insurance, banks, funds and sovereign wealth (like the China Investment Corporation (CIC) in the case of China)
- funds on economic/financial considerations and on project benefits, eg. global climate, energy security, productivity improvement etc.
- sovereign-backed financing (sovereign guarantee)
- non-sovereign-backed financing (private sector, State Owned Enterprises (SOEs), sub-sovereign and municipalities)
- loans and equity
- bonds, credit enhancement, funds etc.
—— the portfolio is expected to grow steadily with an increasing share of standalone projects from 27% in 2016 to 39% in 2017 and 42% in 2018 (projected)
—— share of non-sovereign-backed projects has increased from 1% in 2016 to 36% of the portfolio in 2017. The share of non-sovereign-backed projects is projected to account for about 30% in 2018
- To appropriate (expropriate) the potential of hinterlands
- increasing industrialization
- increasing GDP
- increasing trade
- infrastructure development
- Energy and Minerals in order to bring about a changing landscape
- Container: regional collaboration and competition
AIIB wishes to change the landscape of infrastructure funding across its partner countries, laying emphasis on cross-country and cross-sectoral investments in the shipping sector — Yee Ean Pang, Director General, Investment Operations, AIIB.
He also opined that in the shipping sector there is a need for private players to step in, with 40-45 per cent of stake in the partnership being offered to private players.
Projects aligned with Sagarmala are being considered for financial assistance by the Ministry of Shipping under two main headings:
- Budgetary Allocations from the Ministry of Shipping
- up to 50% of the project cost in the form of the budgetary grant
- Projects having a high social impact but low/no Internal Rate of Return (IRR) may be provided funding, in convergence with schemes of other central line ministries. IRR is a metric used in capital budgeting to estimate the profitability of potential investments. It is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. IRR is sometimes referred to as “economic rate of return” or “discounted cash flow rate of return.” The use of “internal” refers to the omission of external factors, such as the cost of capital or inflation, from the calculation.
- Funding in the form of equity by Sagarmala Development Co. Ltd.
- SDCL to provide 49% equity funding to residual projects
- monitoring is to be jointly done by SDCL and implementing agency at the SPV level
- project proponent to bear the operation and maintenance costs of the project
- importantly, expenses incurred for project development to be treated as part of SDCL’s equity contribution
- preferences to be given to projects where land is being contributed by the project proponent
What are the main financing issues?
Role of MDBs and BDBs for the promotion of the shipping sector in the country
provision of long-term low-cost loans to shipping companies for procurement of vessels
PPPs (coastal employment zones, port connectivity projects), EPCs, ECBs (port expansion and new port development), FDI in Make in India 2.0 of which shipping is a major sector identified, and conventional bank financing for port modernization and port connectivity
The major constraining factors, however, are:
- uncertainty in the shipping sector, cyclical business nature
- immature financial markets
People’s Convention Vows to Challenge Undemocratic & Destructive Global Finance: Resolves to Build Political and Economic Alternatives
People’s Convention Vows to Challenge Undemocratic & Destructive Global Finance:
Resolves to Build Political and Economic Alternatives
Mumbai, June 23: “The international financial institutions like AIIB (Asia Infrastructure and Investment Bank) must function in a deeply democratic manner respectful of national sovereignty, or else be shut down for they constitute a threat to the nation’s economic and political security. These financial institutions are harbingers and promoters of the neo-liberal reforms responsible for the hijacking of the democracy itself; regressive changes to environmental, labour, land, accountability laws; promoting privatisation and cartelisation; and burdening every citizen with huge debt, and destruction of minimal welfare measures.”
This was unanimously conveyed by over 1000 delegates from 200 organisations who gathered from all over India at the three day Peoples’ Convention on Infrastructure Financing, organised in the backdrop of the forthcoming AIIB Annual General Body meeting hosted by India in Mumbai. The Convention debated, discussed and challenged in 20 parallel workshops, the functioning of the international financial institutions and complicity of the Indian ruling and political class in pushing big and unnecessary hyper inflated infrastructure projects like industrial corridors, bharatmala, sagarmala, bullet trains, smart cities and others.
In the political resolution adopted at the end of the Convention delegates resolved to challenge the undemocratic and economically unsound functioning of IFIs including AIIB, World Bank, IFC and others. The Convention also resolved to push for people-centered alternatives in all sectors of the economy, and to advance an inclusive model of development in which finance and infrastructure support the vulnerable and the poor communities, instead of supporting primitive accumulation of natural resources and maximising the profits of the multinational corporations and global elite further contributing to the increased inequality in the society.
Delegates vowed to return to their communities to build massive resistance to the ongoing destruction of the environment and livelihoods of the poor and the working classes, and to work to create decent jobs, promote sustainable farming, equitable access to public services, advancement of the entrepreneurial skills of artisanal and natural resource dependent communities, and of labour-intensive small and medium enterprises. The Convention reasserted its belief in democratic decision-making and the advancement of cooperative federalism as a method of resisting the prevailing hegemony of undemocratic and unaccountable financial institutions such as the AIIB.
Speaking to the media, prominent activist and Goldman Environment Awardee Prafulla Samantra said,“The Peoples’ Convention is further strengthening our strategies and vision to oppose and reject international finance which does not confine to the democratic principles and causing immense and irreversible damage to people, depriving of their livelihood and snatching away their resources and causing damage to environment, accelerating climate change”.
The three-day convention was attended by different trade unions, networks of hawkers, fishworkers, slum dwellers, adivasis, dalits, farmers organisations and peoples movements. The convention was attended by senior activists, academics and financial analysists including Medha Patkar, economist Prof. Arun Kumar, financial analyst Sucheta Dalal, activists Ulka Mahajan, Com. Roma, Shaktiman Ghosh, Leo Colaco, T Peter, Dr Sunilam, Ram Wangkheirakpam, Leo Saldanha, Rajendra Ravi, Gabriele Dietrich, Surekha Dalvi, Sanjay M G, Ashok Chaudhary, Gautam Bandopadhyay, Bharat Patel, Jesu Rethinam, Seshagiri Rao, Meera Sanghamitra, Maglin Philomin, Soumya Dutta, Awadhesh Kumar, Umesh Nazir, Raju Bhise, Prof H.M. Deserda and many others.
“Financial institutions have declared a war on people, land, water and coasts. Workers rights are sacrificed at the altar of development. We are left with no option than to reject and oppose this onslaught by the financial institutions, both national and international” said Jesu Rethinam of National Fishworkers Forum.
Asian Infrastructure Investment Bank, the two-year-old multilateral bank, is investing in all major sectors, including energy, without robust policies on environmental-social safeguards, transparent public disclosure and an accountability/complaint handling mechanism. Out of the total 24 projects, it has financed, USD 4.4 billion has already been approved. India is the biggest recipient from AIIB with more than 1.2 billion USD supporting about six projects including Transmission lines, Capital City Development at Amravati, rural roads etc. with another 1 billion USD in proposed projects.
WGonIFIs, a network of movements, organisations and individuals to critically look at and evaluate the policies, programmes and investments of various International Finance Institutions (IFIs), and joining the celebration of the people and communities across the world in resisting them. A list of the network is available here.
Last year, when the Asian Development Bank completed 50 years, the WGonIFIs observed it by holding actions of protests in over 140 locations spread in over 21 states in India against the investment policies of ADB and other International Financial Institutions.
For further details, please contact:
Working Group on IFIs | email@example.com
Mumbai Resolution: PCIF Declaration Final 23 June2018
Photographs for free use: https://www.flickr.com/photos/159098579@N03/albums/72157698223280385
Mukta Srivastava | +91 99695 30060
Shweta Tambe | +91 98693 40816
Maju Varghese |8826249887
Mecanzy Dabre | 9665006429
Himshi Singh | 9867348307
Peoples’ Convention on Infrastructure Financing Challenges AIIB’s Reckless Lending: People Vow to Resist Attempt to Usurp Natural Resources & Livelihood in the Name of Development
AIIB’s proposed deal with India’s $2.1 billion National Investment and Infrastructure Fund (NIIF) would also threaten to revive a host of stalled projects in the country potentially including coal, power, petroleum, railways and roads – many of which are currently shelved because of high social and environmental risks and opposition by local communities.
एशियन इंफ़्रास्ट्रक्चर इन्वेस्टमेंट बैंक और भारत का नेशनल इन्वेस्टमेंट एंड इंफ़्रास्ट्रक्चर फ़ंड के निवेश संकट की और एक इशारा
इस सेक्टर में निजी क्षत्रे को आकर्षित करने के लिए सरकार ने 2016 में इस पर चर्चा शुरू की कि नवीकरणीय ऊर्जा के क्षत्रे को और विस्तृत किया जाए ताकि 25 मेगावाट क्षमता से अधिक के जलविद्युत स्टेशन भी उसमें शामिल किए जा सके। इससे सरकार को 2022 तक 175 मेगावाट नवीकरणीय ऊर्जा उत्पादित करने के लक्ष्य को हासिल करने में मदद मिलेगी।