Jakarta to compete with Beijing to host AIIB headquarters

Hong Kong

INDONESIA will seek to host the Asian Infrastructure Investment Bank's (AIIB) headquarters, the finance minister of South-east Asia's largest economy said on Monday, though the new multilateral lender is led by China and Beijing wants the role for itself.

A number of countries have said they would participate in the AIIB. The new bank is slated to start operations by the end of the year.

"It is our aspiration to have the headquarters in Jakarta, but of course we will have to compete with Beijing on that," said Bambang Brodjonegoro, speaking on the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong.

Mr Bambang, echoing recent comments by China's Finance Minister, Lou Jiwei, said the infrastructure needs of Asia are endless and the AIIB will be complementary to the Asian Development Bank (ADB), which focuses on development and education, as well as infrastructure. "AIIB will focus only on infrastructure," the Indonesian minister said.

At least 35 countries will join the AIIB by the deadline of March 31, the bank's interim chief, Jin Liqun, said on Sunday.

India, Indonesia and New Zealand have expressed interest in joining the bank, he told a conference in Beijing, following a request by Britain, France, Italy and Luxembourg to become founding members.

International Monetary Fund (IMF) head Christine Lagarde said on Monday she welcomed Beijing's creation of a new infrastructure bank.

Ms Lagarde made the comments as she wrapped up a five-day visit to China.

In a statement issued after she met Premier Li Keqiang, Ms Lagarde hailed Beijing's "impressive efforts" to reform in areas including combating corruption, controlling pollution and "clearing the path to even more engagement with the world".

"I welcomed China's various initiatives in this area, including through the newly established Asian Infrastructure Investment Bank," she said.

Ms Lagarde said on Sunday that the IMF would be "delighted" to cooperate with the new bank, according to China's official Xinhua news agency.

World Bank managing director Sri Mulyani Indrawati has also hailed the AIIB, telling Xinhua: "Any new initiative that will mobilise funding in order to fill the infrastructure gap is certainly welcome".

China has embraced the European eagerness to take part in the new body, with state media claiming that the US risks being sidelined.

Beijing touts the US$50 billion institution as a tool to help meet gaps in financing needs for regional development in Asia.

But US officials have expressed caution amid worries the institution could undermine the World Bank.

Washington, worried about China's growing diplomatic clout, has questioned whether the AIIB will have sufficient standards of governance and environmental and social safeguards.

Ms Lagarde also said the IMF welcomed Beijing's long-standing drive to include its yuan in the IMF's basket of reserve currencies, adding: "We will work closely with the Chinese authorities in this regard."

Ms Lagarde's visit comes amid mounting concern over slowing growth in the world's second-largest economy. Top Chinese leaders have said the economy is in a delicate transition from decades of double-digit annual growth to a new, slower and more sustainable model, a stage they have branded as the "new normal".

Ms Lagarde referenced the phrase and offered praise for the structural reforms pledged by the ruling Communist Party at its top meeting in late 2013. "This should lead to slower, safer, and more sustainable growth - with a focus on innovation and entrepreneurship - which will be good for China and its people, and good for the world," she added. AFP