ADB, AIIB heads in breakthrough meeting in Baku

Tokyo

ASIAN Development Bank (ADB) president Takehiko Nakao and Jin Liqun, who is slated to become head of the China-led Asian Infrastructure Bank (AIIB), met on the sidelines of the ADB annual meeting in the Azerbaijan capital of Baku on Friday.

The meeting, where the two development bank heads agreed to cooperate in areas such as co-financing of infrastructure projects, was hailed as a breakthrough in view of what has widely been expected to be a competitive relationship between the ADB and the AIIB.

"Mr Nakao and his staff and Mr Jin and his team discussed for an hour future collaboration, including co-financing, and confirmed their commitment to working together for Asia," ADB said in a statement.

"They acknowledged the large infrastructure gap in the region, the critical role of infrastructure in supporting sustainable development and poverty reduction, and the importance of safeguard policies on environmental and social impacts of projects."

Said Mr Nakao: "The ADB will cooperate and co-finance with the AIIB on infrastructure financing across Asia by using our long experience and expertise in the region."

The two also agreed to "continue sharing necessary information and further discuss concrete options for collaboration".

The launch of the AIIB, which is to begin operations by the end of this year, is expected to be a major talking point at the 48th annual meeting of the ADB, which begins officially on Saturday in Baku.

Among the ADB's 67 member countries, many - including Asian giants such as India and Indonesia - have signed a memorandum of understanding on joining the Beijing-based AIIB.

Potential competition between the two banks for financial and other resources could detract from the effectiveness of both institutions, some have suggested. But Friday's meeting is seen as likely to help allay such fears.

It is also seen as likely to help thaw strained relations between Japan and China since Mr Nakao is a former senior official of Japan's Ministry of Finance and Mr Jin is a former senior Chinese finance ministry official.

Both Japan and the United States have so far held back on committing themselves to joining the AIIB, citing concerns over governance of the new institution and over what standards AIIB will adopt on such matters as environmental protection and other project safeguards.

But sources in Baku told The Business Times that the assurances by Mr Jin, who is secretary-general of the multilateral interim secretariat of the AIIB, that the new bank would respect such standards could mollify Tokyo and Washington.