There is a potential to unlock billions of dollars for infrastructure in the developing world, according to World Bank. Most of the development goals face hurdles due to lack of proper infrastructure financing facilities in developing countries. But proper infrastructure facilities in developing countries are a prerequisite for achieving the UN Sustainable Development Goals (SDGs). Infrastructure is one of the key conditions to attract the foreign direct investment (FDI) and boom export. Moreover, infrastructure plays a critical role in growth, competitiveness, job creation and poverty alleviation. In a report, McKinsey & Company has argued that a dollar of infrastructure investment can raise gross domestic product (GDP) by 20 cents in the long run by boosting productivity. Infrastructure investment can raise GDP in the long run by boosting sustainable productivity. Therefore, the infrastructure investment will be vital for emerging markets in future.
The world invests US$ 2.5 trillion annually in transport, power, water, and telecom but it needs to invest US$ 3.3 trillion annually just to meet growth forecasts by 2030, according to McKinsey & Company data. Most of the investment will be required for transport, electricity, water supply and sanitation, solid waste management, telecommunications and irrigation. According to the Organisation for Economic Cooperation and Development (OECD), total global infrastructure investment requirements by 2030 for transport, electricity generation, transmission and distribution, water and telecommunications will come to US$ 71 trillion.
China has envisioned to promote the Silk Road through different economic cooperation movement such as Belt Road Initiative, Asian Infrastructure Investment Bank (AIIB) and Going Global Strategy. AIIB, a Multilateral Development Bank (MDB), which has been launched at the initiative of the Chinese Government with 57 founding members, aims to develop the global infrastructure facilities. For the last few decades, China has excelled its ability to develop infrastructure facilities all over the world. China has made around RMB 42.7 billion of infrastructure-related export only to AIIB members countries in the year 2014. However, most of the developing countries always expect international fund to construct infrastructure facilities in their countries but due to lack of loan or equity from different sources some of them can't build the infrastructure at all. As a new MDB, AIIB has pledged to meet this gigantic global financing needs for infrastructure and promote rapid infrastructure development among AIIB members' country.
At present, there exists a huge growing infrastructural investment gap, and AIIB can narrow this gap by attracting more and more member countries from every part of the world. The member countries expect cost-effective and sustainable financing in development projects from AIIB. Projects' financing differentiation of AIIB from other competitive MDBs will add value for AIIB to attract global infrastructural investment regime in 21st century.
The vision of AIIB is to create huge infrastructure development in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development and logistics. One of the obstacles of taking grants for MDBs is long period of time for loan approval, but it is expected that due to the non-resident board system of AIIB time of loan approval will be shortened. This unique process and quick financing will minimise the project completion time, save project cost and bring greater economic value. By joining in this expressway of infrastructural investment opportunity, all the developing countries may have rapid growth in trade, financing and investment. Now, most of the countries prefer the sustainable infrastructure investment project, which synchronises with AIIB commitment.
Currently, most of the global emerging economies are involved with AIIB and they are now flexible in choosing financial sources from many MDBs. The developing countries like Bangladesh, India, Thailand, Pakistan, Laos, Cambodia, Kazakhstan and some Middle-east countries already got fund from AIIB for their different infrastructural projects. Such infrastructural investment seems to boost the communication and raise the growth of respective countries.
Every developing country must ensure enough fuel for infrastructural development to pace the overall economic growth. AIIB is likely to become a significant partner for the development of Bangladesh. At present, Bangladesh needs a huge infrastructure investment in different sectors to realise its vision 2041. Significant infrastructure financing is required for power, energy, sea-port, roads and highway, MTR, metro rail, high speed rail, telecommunication and water & sanitation-related projects. Financing these facilities will boost the GDP and overall development of the country. Bangladesh should access investment prospects from AIIB and others MDBs to materialise its infrastructure dream.
The writer is a Master's student at the University of International Business and Economics, Beijing, China.