Iran AIIB Membership Unlocks Investment Potentials

EghtesadOnline: Iran's membership in Asian Infrastructure Investment Bank has strengthened the country's economic clout in the region, said the head of Economy Ministry's Department of Banking and Insurance Affairs.

News ID: ۷۷۳۹۰۴

13 February 2017

"In addition to reviving our international relations, AIIB membership has presented us with a great opportunity to tap a great potential for resources and investment," Alireza Khatounzadeh Abyaneh also told Shada.ir, a news website affiliated with the Economy Ministry.

Khatounzadeh noted that another significant impact of this cooperation at the global level is that it facilitates foreign investment in Iran.

"Due to our budget limitations and a shortage of funds, benefiting from these resources for our infrastructure projects is of great importance and based on AIIB's statutes, Iran is eligible to use its resources not only in its infrastructure projects but also to undertake similar projects in other member countries and move toward sustainable economic development," Financial Tribune quote him as saying.

"Aside from investment, the collaboration and interaction spirit created by AIIB grants us the opportunity to experience and utilize the technical capabilities of other countries for the development and progress of our economy."

Asked about Iran's position in the Silk Road project after its membership in AIIB, the official said, "Since China is the founder of AIIB and also the force behind the New Silk Road and as Iran is located on the Silk Road, the northeastern provinces will be able to use the bank's resources for infrastructure [projects]."

One of the most popular terms for China’s diplomatic achievements in 2014 is arguably its strategy of “One Belt, One Road,” i.e., the New Silk Road Economic Belt, which links China with Europe through Central and Western Asia, and the 21st Century Maritime Silk Road, which connects China with Southeast Asian countries, Africa and Europe.

Banking Effects

Khatounzadeh said AIIB membership can also improve the domestic banking sector and Iran can realize the vision of becoming the hub of banking industry in the region by 2025 following its AIIB membership.

An international financial institution, the AIIB aims to support infrastructure development in the Asia-Pacific region. It was proposed by the government of China and consists of 57 member states, or the “founding members”.

The bank is widely regarded as a strong and emerging rival to western lenders, namely the International Monetary Fund and the World Bank, both headquartered in Washington.

AIIB operates with a capital of $100 billion, equivalent to two-thirds of the capital of the Asian Development Bank and about half of the World Bank.

Along with 26 other initial founding member states, Iran signed the the bank's constitution on June 29 in Beijing and currently holds 15,808 shares, or 1.61% of all the shares, granting the country a 1.63% voting rights.

Iranian lawmakers approved the proposal of Iran’s membership in AIIB in late August and President Hassan Rouhani enacted the law in early October.

Strengthening relations with Asian powers through infrastructure development is Iran’s main objective in joining the bank.

Abbas Akhoundi, the minister of roads and urban development, requested the bank's Chinese executive to send a delegation from AIIB to Tehran to witness development projects at close range and discuss possible collaboration.