#1ASIAN INFRASTRUCTURE AIIB INVESTMENT BANK About AIIB GMS Subregional Transport Forum (STF-25) Siem Reap, Cambodia June 14, 2022 Aleksandr Prodan, PhD Senior Officer, Policy & Strategy - Connectivity [email protected]#2AIIB at a Glance □ AIIB is a MDB with a mission "Financing Infrastructure for Tomorrow" with an operational focus on green infrastructure, connectivity and regional cooperation, technology-enabled infrastructure and private capital mobilization. □ AIIB began operations in January 2016 and has now grown to 105 approved members worldwide. Name Headquarters Paid-in Capital Approved Investment Professional Staff Credit Ratings Asian Infrastructure Investment Bank (AIIB) Beijing, China USD20 billion (Overall capital: USD100 billon) USD34.91 billion (as of April 2022), 176 projects 367 (as of September 2021) AAA (Stable) / Standard & Poor's, Moody's and Fitch PUBLIC AIIB Members Members Regional (46) Members Nonregional (45) Prospective Regional (5) Afghanistan Australia Azerbaijan Bahrain Israel Russia Algeria France Peru Jordan Samoa Argentina Germany Poland Armenia Iraq Bolivia Prospective Nonregional (9) Senegal Djibouti South Africa* Kazakhstan Saudi Arabia Austria Ghana Korea Singapore Belarus Greece Portugal Romania Kuwait* Kenya Lebanon Libya Togo Venezuela Bangladesh Kyrgyz Republic Sri Lanka Belgium Guinea Rwanda Papua New Guinea Nigeria Brunei Darussalam Lao PDR Tajikistan Benin Hungary Serbia Cambodia Malaysia Thailand Brazil Iceland Spain China Maldives Timor-Leste Canada Ireland Sudan Cook Islands Mongolia Tonga Chile Italy Sweden Cyprus Myanmar Turkey Côte d'Ivoire Liberia Switzerland Fiji Nepal UAE Croatia Luxembourg Tunisia Georgia New Zealand Uzbekistan Denmark Madagascar United Kingdom Hong Kong, China India Indonesia AIIB Iran Oman Vanuatu Ecuador Malta Uruguay Pakistan Philippines Qatar Vietnam Egypt Ethiopia Finland Morocco Netherlands Norway Prospective founding member: These are prospective members who were original signatories to the Articles of Agreement in June 2015. Countries or territories who sought membership after that date are simply called prospective members. All prospective members have been approved by the Board of Governors but have not yet met the full requirements of membership. 2#3Thematic Priorities A firm commitment to sustainability in all of its dimensions - 5 7 economic, financial, social and environmental. $ Green Infrastructure Promoting green infrastructure and supporting members to meet their local and national environmental and development goals, especially their commitments under the Paris Agreement and the United Nations' Sustainable Development Goals. Connectivity and Regional Cooperation Facilitating better transport, digital, energy and water connectivity within Asia and between Asia and the rest of the world. It will also support projects that facilitate trade, cross-border investment, tourism, financial and digital integration across Asian economies and beyond. Technology-enabled Infrastructure Based on the enhanced recognition of the important role technology plays, AIIB will support projects where the application of technology delivers better value, quality, productivity, efficiency, resilience, sustainability, inclusion, transparency and better governance along the project cycle. Private Capital Mobilization To support projects that directly or indirectly mobilize private financing into sectors within AIIB's mandate. Includes developing infrastructure as an asset class in Asia. AIIB 3#4AllB's Corporate Targets Climate finance 50% of actual financing approvals by 2025 Private sector financing 50% of actual financing approvals by 2030. Cross-border connectivity 25% -30% of actual financing approvals by 2030 Paris Agreement 100% of our operations to be aligned by July 2023 AIIB 4#5PUBLIC Investment Operations Approved projects since inception: USD 34.9 billion. Number of projects approved: 176. Investments in energy, transport, connectivity, digital, water, sanitation, public health, rural infrastructure, urban development and others. AllB will leverage its balance sheet to mobilize financing for the private sector. AIIB INDIA MILLIONS 8380.7 3285 3146.2 3129.9 CHINA TURKEY INDONESIA BANGLADESH AllB's Transport Portfolio of approved projects 27 transport projects (USD 5.86 billion) 21 fund investments with infrastructure components (USD 2.85 billion) all GMS countries. AIIB has projects that are approved or are in the pipeline in Approved projects in the GMS: USD 3.89 billion. Number of projects approved: 23 (8 transport). 2839 2480 1711.8 1507.6 1489 1020 MULTICOUNTRY PAKISTAN PHILIPPINES UZBEKISTAN EGYPT RUSSIA 895 796.7 700 559.1 460 364 360 250 216.1 202.3 200 147.5 KAZAKHSTAN OMAN AZERBAIJAN SRI LANKA GEORGIA CAMBODIA 134 121 100 87.5 70 67.3 50 50 50 20 20 JORDAN HUNGARY NEPAL RWANDA VIỆT NAM MONGOLIA SINGAPORE BRAZIL TAJIKISTAN LAO PDR MALDIVES ECUADOR FIJI MYANMAR KYRGYZ REPUBLIC COOK ISLANDS LO#6AIIB Financial Instruments • Sovereign-Backed Financing Sovereign-backed loans will have an average maturity of up to 20 years and a max. maturity limit of up to 35 years. • AIIB continues to co-finance projects with other lenders in addition to expanding its standalone portfolio. • Public sector loans conduct a full assessment of the project's benefits, risks and borrower implementation capacity. Non-sovereign-Backed Financing • Borrowers could range from sub sovereign public entities to private enterprises. • The terms and conditions will be set on a commercial basis and reflect the expected risk to the Bank and market conditions. • AIIB's exposure can be up to 35 percent of the long-term capital of the obligor, or for a new project, up to 35 percent of the project's value. Equity investments Equity investments • Fair terms, • Clear potential exit strategy Acceptable internal rate of return. • Limits: up to 10 percent of available capital • AIIB would be a minority investor and shall not seek a controlling interest in the target entity or enterprise. . • Guarantees Partial Debt Guarantee are available to clients. • Private sector operations • Incorporates partial debt guarantees and unfunded risk participations. Projects involving guarantees will be appraised, processed, and monitored the same way as loans. • For capital headroom and exposure management purposes, guarantees will be treated as if they were on the balance sheet (i.e. treated the same way as loans). AIIB CO 6 PUBLIC#7AIIB Special Fund Resources Resource 1. Project Preparation Special Fund (PPSF) 2. Special Fund Window (SFW) Product Grant TA for - project preparation Grant - Eligibility IDA recipients . Non-IDA recipients with substantial development needs and capacity constraints Interest rate buy-down IDA-only members of AIIB AIIB Type of projects Typical size Sovereign 1-5 M Sovereign 5-10 M 7 PUBLIC#8Multilateral Cooperation Center for Development Finance (MCDF) USD 180M Finance Facility can provide support through AIIB as an Implementing Partner on all areas to support the development of high-quality connectivity infrastructure: AIIB a) Master plans. b) Project preparation: • • • Pre-concept support; Pre-feasibility and feasibility studies; Debt sustainability assessments; Environmental and social assessments. c) Investment matching to secure financing: through JIGSAW - MCDF's digital platform Target connectivity sectors: transport, energy, ICT, and water. Both sovereign and PPP projects, and hard and soft infrastructure. Beneficiary Country Dialogue on projects AIIB Grants for Project Preparation and Capacity Building MCDF 8 PUBLIC#9AIIB Transport Sector Strategy Trunk linkages • Additional transport capacity or removal of bottlenecks between major urban centers and key economic areas • Can be national or provincial highways and railways Key criteria for project selection and design: Economic return and financial viability. • Cross-border connectivity Road and rail connections serving cross-border traffic Nodal infrastructure (airports, ports, dry ports, multimodal transport hubs and logistics hubs that serve international traffic) • AIB will encourage the use of its Special Fund to support the preparation of cross-border projects, including those in middle- income countries. • • Transport integration Projects enhance seamless transport across different modes or within a network (e.g. intercity railway integration with urban transport using transport hubs; integration between ports and airports and surrounding areas using roads Integration of international connectivity by building domestic links • Upgrading of existing infrastructure Upgrading of existing infrastructure can have a high econ return and can improve existing asset utilization. AIIB Approach: . Ensuring Economic/financial viability • Mobilizing private capital • Developing Partnerships • E&S responsibility . Embracing both Innovative and Proven Technologies AIIB AIIB Transport Sector Strategy: https://www.aiib.org/en/policies-strategies/_download/strategy/transport-sector-strategy.pdf 9 PUBLIC#10PUBLIC • SAMPLE AIIB PROJECT IN GMS Lao People's Democratic Republic: National Road 13 Improvement and Maintenance Project Approved Financing: US$40 million PROJECT OBJECTIVE To improve road conditions, safety and climate resilience on critical sections of National Road 13 using an innovative contracting model (OPBRC). The road design will also be strengthened to meet ASEAN standards. PROJECT DESCRIPTION Widening of a 19 km high traffic section close to Vientiane capital city (Sikeut to Songpeuay market) from the existing two-lane to a four-lane road; Improvement/strengthening of a 39-km section of two-lane road (Songpeuay market to Phonhong) with Portland cement concrete pavement. • The project is using an innovative contracting model, an Output- and Performance-based Road Contract (OPBRC) https://www.aiib.org/en/projects/details/2019/approved/Lao-PDR-National-Road-13-Improvement-and-Maintenance-Project.html AIIB 10 10#11ASIAN INFRASTRUCTURE AIIB INVESTMENT BANK Aleksandr Prodan, PhD Senior Officer, Policy & Stratolicy Connectivity [email protected] AIIB Tower A, Asia Financial Center No.1 Tianchen East Road Chaoyang District Beijing, China 100101 aiib.org Thank You!