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(2nd LD) S. Korean minister sees AIIB's 'critical role' in Asia's growth

All News 17:24 January 16, 2016

(ATTN: ADDS quotes in last 4 paras)

BEIJING, Jan. 16 (Yonhap) -- South Korea's new Finance Minister, Yoo Il-ho, said Saturday that the Chinese-led Asian Infrastructure Investment Bank (AIIB) will play a "critical role" in helping Asia maintain its growth and better cope with economic challenges.

"The foremost purpose of the AIIB is to promote economic growth in the Asian region by supporting infrastructure investment," Yoo said in his speech at the opening ceremony for the new Chinese-led regional lender.

"Nearly half of the Asian population lives in poverty. Annual demand for infrastructure investments is projected to be approximately US$730 billion, but only 3% of that demand is met through bilateral and multilateral development funds," Yoo said.

It is difficult for some Asian countries to get "longer-term investment funds" because of their relatively under-developed financial markets, Yoo noted.

"For this reason, I look forward to the critical role of the AIIB," Yoo said. "It will help the region better cope with its challenges. It will provide a new inflow of large investment capital for endogenous, sustainable growth."

"We must continue to cooperate closely and continue our strong support of the AIIB," Yoo said. "We also must not refrain from giving the AIIB constructive advice."

With a paid-in capital of US$100 billion and 57 members, including South Korea, the AIIB has been seen as a potential counterbalance to U.S.-led multilateral lenders such as the Asian Development Bank (ADB) and the World Bank.

The United States and Japan did not join the AIIB, while calling for transparency and higher governance in the new bank.

Along with concerns over transparency in the AIIB, there are worries that China could exploit the new lender as a means to increase its own economic and geopolitical influence.

The AIIB is expected to start offering loans to foreign countries by the middle of this year.

Yoo said South Korean companies are likely to benefit from the AIIB as South Korea became the fifth-largest shareholder of the new regional lender.

"Details are not publicized yet, but demand for infrastructure-related construction is expected to be high," Yoo told South Korean media after the opening ceremony.

"Information is important for such international projects and we are playing a leading role in participating in the AIIB. I think South Korean firms could make greater use of the information," Yoo said.

kdh@yna.co.kr
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