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  2. About BFA

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Speech by BFA Secretary General Zhou Wenzhong At the Summary Session of the BFA Seminar on Infrastructure Connectivity in Asia: The Financing Challeng
Origin:Boao Forum for Asia      Time:2014-07-11 11:05:47    Views:795212

Speech by BFA Secretary General Zhou Wenzhong At the Summary Session of the BFA Seminar on Infrastructure Connectivity in Asia: The Financing Challeng

 Dear distinguished guests:

Through a whole day’s discussion, we have reached consensuses in many aspects on strengthening infrastructure investment and financing cooperation for Asia. Meanwhile, we have produced many far-sighted ideas and suggestions. The main results of our discussion can be summarized as follows:

First, infrastructure connectivity in Asia is the inevitable trend of regional economic integration as well as a new force powering Asian economies to achieve sustainable growth.

Strengthening infrastructure development and construction in Asia is the most common consensus of this meeting. Many delegates point out that infrastructure development and construction is not only a new growth point for sustainable economic development in current circumstances, but also a powerful lever for promoting economic structure adjustment. The investment in infrastructure construction has a powerful multiplier effect. With current Asian economy as a whole under mounting pressure for downturn, increasing investment in infrastructure construction and achieving connectivity among Asian economies not only are good for promoting employment, creating new demands, and doubling and redoubling total social demand and national income, but can promote economic structure transformation and create a smoother and more effective production, circulation, and consumption environment for the overall economic operation as well. Delegates from Asian emerging economies especially emphasize that it is a must to increase investment in the infrastructure of the developing economies. The reason for this is that in our pursuit of either stable economic growth or social benefits based on the economic growth, we will never be able to achieve inclusive development or to allow people from all classes to share the benefits of economic growth without a good infrastructure system.

It is safe to say that further strengthening infrastructure construction in Asian economies and realizing their connectivity are their common tasks and goals in the post-financial-crisis era.

Second, innovative thinking and approaches should be adopted to solve the pervasive fund bottleneck confronting infrastructure construction in Asia.

Another common consensus among the delegates is that it is extremely necessary and imperative that Asian countries strengthen investment in infrastructure development and construction in their own territories and even the entire Asia. We are now facing a dilemma between “great demand and severe lack of capital.” On the one hand, the current infrastructure of Asian economies falls shorter and shorter of meeting the need of sustainable economic development. On the other hand, most Asian countries suffer from capital bottleneck in infrastructure investment, which seriously restricts their infrastructure development and construction.

According to the estimation by the Asian Development Bank, there is a huge financing deficiency for Asian infrastructure in the coming ten years. Asia needs at least eight trillion USD of capital as infrastructure investment for it to sustain its economic growth at the current level. 

How can we make up such a huge capital deficiency? During the seminar, we find that what the infrastructure development and construction in Asia, in particular that for realizing regional connectivity, lacks is not capital, but capital channeling capability and the corresponding mechanism. The capital bottleneck we are facing does not refer to capital shortage, but the lack of practicable financing platform and business mode, which are essential to effectively turn the huge capital potentials inside and outside Asia into investment in infrastructure. 

Centering on breaking the capital bottleneck and tapping the potentials of the capital market, the delegates had practical and professional discussion and exchange, which covered the following issues: How can the available public fund and potential private capital be integrated for breaking the bottleneck in infrastructure development? What are the financial tools and business financing modes suitable for infrastructure investment in Asia? What financial tools should be utilized and developed for carrying out transnational investment in infrastructure? What are the incentive policies and measures for boosting private capitals’ initiative to invest in infrastructure development? The delegates actively presented their opinions and ideas about these realistic issues and contributed their creative proposals. Their opinions and proposals have high enlightening and guiding significance for Asian economies to carry out cooperation in investment and financing for infrastructure connectivity, including the PPP, or public-private partnership, mode. 

Third, it is imperative and feasible that the Asian Infrastructure Investment Bank (AIIB) be established. 

This is the most practical consensus reached and proposal raised by this meeting. Considering the severe challenge confronting the infrastructure construction in Asia, the delegates made detailed analysis of the important contribution to Asian infrastructure construction by the existing international multilateral financial institutions. Meanwhile, they also pointed out these institutions’ limitation and the necessity to establish a new Asian infrastructure investment bank that is complementary to them. 

The delegates had in-depth discussions on the huge demand of the infrastructure construction in Asia for investment capital, limits of the existing multilateral financial institutions, and the relevant successful experience of European investment banks. The discussions led to a conclusive consensus --- the imperative establishment of AIIB, a specialized multilateral investment and financing platform, by effectively integrating the huge demand of Asia for infrastructure construction with the huge capital potential inside and outside Asia. More importantly, the delegates also had in-depth discussion about AIIB, which is under preparation for establishment. They generally emphasized that AIIB should be a development community, that AIIB should be an investment bank that faces the future, is reliable, stable, and under proper governance, assesses the investment projects objectively, and gives them sustainable and environmental-friendly guidance, and that AIIB should be a quasi-commercial infrastructure investment bank with Asian characteristics and meeting Asian features. 

The aforesaid consensuses on the basic framework and principles of AIIB and the concrete proposals by many delegates about the establishment and operation of AIIB offer good ideas for Asian countries to prepare the establishment of AIIB and will undoubtedly become the precious intellectual capital and wealth during the preparation and establishment of AIIB. 

Dear friends, ladies and gentlemen! 

The seminar is to end soon, but we are more closely connected by the cooperation spirit and financial innovative spirit initiated by it. We will continue our discussion for the attainment of our common goal. BFA will carefully sort out the wisdom contributed by all delegates and turn their opinions, ideas, and proposals into intellectual driving force and actual practice of promoting the preparation and establishment of the Asian Infrastructure Investment Bank. 

Thank you.  

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