China is moving quickly to establish its new Asian Infrastructure Investment Bank, with suggestions it will open by the end of this year. However, it hasn't yet revealed where its headquarters will be.
Perhaps it should consider Bangkok. After all, Thailand is aiming to become the financial and logistic hub for the Asean Economic Community.
Although some have suggested the new bank will be based in Beijing, the Asian Development Bank is headquartered in Manila, and there are arguments in favour of also basing the new bank in Southeast Asia.
In particular, it would help present the AIIB as a regional bank and not merely a Chinese bank, while still being close to China and at the heart of the emerging RCEP – a free-trade agreement between Asean, China, Japan, South Korea, India, Australia and New Zealand. If the new bank is based in Southeast Asia, the three main alternatives would be Singapore, Kuala Lumpur and Bangkok. Of these choices, Thailand has the closest relationship with China.
Another important consideration is attracting the high-calibre personnel that will be needed to staff the bank. All three cities are cosmopolitan and great places to live in, but I think Bangkok would be a popular choice, although I admit I am biased.
The planned bank was first announced last October at the Asia-Pacific Economic Cooperation forum in Bali and more details emerged last month. It will have start-up capital of US$50 billion, with half the money contributed by China and the rest by other countries. Already more than 20 countries have agreed to participate, including Thailand.
The main mandate of the bank will be to fund infrastructure in Asia – China estimates that the whole of the region needs about $8 trillion, or 6 per cent of gross domestic product, to fund its infrastructure needs. However, private investment in Asia’s infrastructure has grown at an average of 1.5 per cent a year since 2002, far below the region’s 8.3 per cent average.
Development in Southeast Asia will be a top priority, as China is increasingly using the region as a manufacturing and logistics hub and presents a great opportunity for Thailand. But despite huge demand for infrastructure development around the world, the Asian Development Bank and World Bank have been reducing their lending for such projects while it is also difficult to get commercial bank funding.
As a founding member of the new bank, Thailand will contribute to its funding, which will demonstrate Thailand’s willingness to cooperate within the region. While details of Thailand’s contribution are yet to be announced, a top-level adviser to the National Council for Peace and Order, Dr Somkid Jatusripitak, has just completed an official visit to China, where he met Chinese vice president Li Yuanchao. Following the meeting, Thailand and China agreed to resume a joint committee to foster economic cooperation, including infrastructure development, energy, agriculture and trade. Relations between China and Thailand seem to be warming up. If Thailand becomes the base for the new AIIB, relations will become even warmer.