Indonesia announced to support establishment of Asian Infrastructure Investment Bank
Indonesia on 3 November 2014 announced to support the establishment of Chinese-led Asian Infrastructure Investment Bank (AIIB)
Indonesia on 3 November 2014 announced to support the establishment of Chinese-led Asian Infrastructure Investment Bank (AIIB). The decision to support was announced after the meeting of Indonesian President Joko Widodo with the Chinese Foreign Minister Wang Yi at the Presidential Palace in Jakarta.
This was the first trip of Chinese FM Wang Yi to Indonesia since the inauguration of President Joko Jokowi Widodo.
Moreover, both the countries are also looking ahead to develop China-Indonesia relation, as the two countries are strategic partners.
The benefits to Indonesia from joining AIIB
The decision to enter and contribute to the bank was taken because Indonesia believes that infrastructure financing in Asia and Indonesia cannot be achieved through existing multilateral institutions, such as the Asian Development Bank (ADB) and the World Bank.
By joining AIIB, Jokowi will be able to brighten his chances of fulfilling his campaign promises. During the campaign, Jokowi had promised to construct 2000 kilometres of new roads, 10 airports, 10 new ports and establish 10 new economic zones.
According to ADB estimates over the next decade Asia will need an investment in infrastructure to the tune of 8 trillion US dollars. Likewise, Indonesia is projected to require at least 300 billion US dollars over the same period.
Earlier, Indonesia along with South Korea and Australia was one of several major Asia-Pacific countries not to sign MoU to establish AIIB at its official launch on 24 October 2014. It was also the only ASEAN country who did not pledged its support to AIIB. However, Indonesia’s absence from the AIIB launch was attributed not to political reticence but to timing as it going through a political transition.
Importance of Indonesia for China
In particular, Indonesia is on board with China’s Maritime Silk Road initiative. Jakarta’s cooperation is crucial to fulfilling Beijing’s vision of a maritime trade network stretching from East Asia to the Middle East, due to both Indonesia’s rapidly growing economy and its geographic location on the southern edge of the Malacca Strait
Indonesia is on the way of developing into a maritime power, while China proposes to build the 21st century Maritime Silk Road, the two initiatives highly fit with each other.