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Singapore expresses intent to join China-led regional bank

The new Asian Infrastructure Investment Bank, led by China, will fund infrastructure projects in the region.

SINGAPORE: The Republic has expressed its intention to accept China’s invitation to become a founding member of a new regional bank to fund infrastructure projects in Asia, said Singapore’s Ministry of Foreign Affairs (MFA).

Singapore’s intention was conveyed by Deputy Prime Minister Teo Chee Hean at a meeting in Beijing on Monday (July 28) with Chinese Vice-Premier Zhang Gaoli, who had invited Singapore to be part of the Asian Infrastructure Investment Bank (AIIB).

“Mr Teo and Mr Zhang discussed how the AIIB can complement existing multilateral development banks (MDBs), stay open and inclusive and draw upon the best practices of existing MDBs in terms of governance and operations,” said the MFA in a statement.

The leaders also discussed Mr Zhang’s proposal for the two countries to embark on a third government-to-government project in China’s western region, following the Suzhou Industrial Park and Tianjin Eco-city projects. “They tasked officials from both sides to further explore the proposal,” MFA said.

China has said it will probably be the largest shareholder in the AIIB, with a stake of as much as 50 per cent. Reports suggested that the bank would start with US$50 billion (S$62.1 billion) in capital, though Beijing has not confirmed this.

Chinese President Xi Jinping had mooted the AIIB during a visit to Indonesia in October, in what some observers said was an attempt to expand Beijing’s influence on Asia’s security and financial architecture and compete with the Asian Development Bank (ADB) and the World Bank. Japan and the United States are the two largest shareholders of the 67-member ADB, with stakes of 15.7 per cent and 15.6 per cent respectively. Both countries also have a combined voting power of 26 per cent, compared with China’s 5.47 per cent, said the bank’s website.

The need for infrastructure in the Asia-Pacific region is substantial. The ADB has estimated that between 2010 and 2020, Asia will need to spend approximately US$8 trillion on infrastructure to maintain current levels of economic growth.

China has held talks with interested Asian countries on the AIIB, and a memo on setting up the bank is due to be signed in the next few months, said a Xinhua news report this month. “We are actively discussing a founders list, a basic framework and regulations to put the bank into operation as soon as possible,” Xinhua quoted Chinese Finance Minister Lou Jiwei as saying.

Mr Teo, who is also Coordinating Minister for National Security and Minister for Home Affairs, is in Beijing to speak at the 2nd Singapore-China Social Governance Forum. In his meeting with Mr Zhang, who is a member of the Communist Party’s Politburo Standing Committee, the leaders reaffirmed the warm and longstanding bilateral relations between Singapore and China. “They reiterated the commitment of both countries to further deepen and strengthen bilateral economic and social cooperation,” said the MFA statement.

Earlier on Monday, Mr Teo met Mr Meng Jianzhu, a Politburo member and Secretary of the Chinese Communist Party's Political and Legal Affairs Commission. The two leaders opened the Singapore-China Forum on Social Governance, focusing on the rule of law.

Mr Meng said China has an “urgent need” to improve its law-based governance, and looks towards Singapore as a model.

The rule of law has laid the foundation for Singapore society, Mr Teo said, and in the case of corruption, the law is applied strictly.

“However, on most matters of social governance, even though we have laws covering issues such as racial harmony or industrial disputes, we usually do not charge a person or bring him to court. Instead we have, over time, built up policies and platforms to allow such issues to be managed and resolved,” Mr Teo said.

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