Malta signs up to new China-led investment bank

Malta was among 57 countries that signed an Articles of Agreement that established the Asian Infrastructure Investment Bank as an international organisation.

Finance Minister Edward Scicluna signed the agreement on Malta’s behalf during the bank’s inaugural ceremony in Beijing.

Malta and the other 56 countries, including the UK, France, Italy, Germany, Australia and South Korea, have become prospective founding members of this new multilateral development bank that will provide financial support for infrastructural development and regional connectivity in Asia.

The Finance Ministry said in a statement that the bank will have an authorised capital of $100 billion and that the initial subscribed capital is expected to be around $50 billion. China will contribute almost $30 billion, making it the largest shareholder. China’s voting share in the bank’s decision-making process will be just over 26%- more than a quarter of the votes needed to veto projects- followed by India, Russia and Germany, with 7.5% 6% and 4% respectively.

Non-Asian countries will be allowed to hold a maximum of 30% stake in the bank, and Chinese Finance Minister Lou Jiwei said that Asian countries would enjoy “a bigger voice at the table”.

China has reassured that it “does not seek a veto power in the bank” and that it expects to lose its current dominance in the future as more countries join- in contrast with the World Bank, in which the US enjoys a limited veto power.

The bank, which will be based in Beijing, is expected to be officially established at the end of 2015. China says that the bank will play a major role in speeding up development in a region where $8 trillion in investment is expected to be required in the next five years alone.

It will provide an alternative to US dominated institutions such as the World Bank and the Asian Development Bank, which some in Asia consider to impose too many conditions on development.

Countries which have not joined, including Japan and the USA, have warned about the institution’s management, ranging from its requirements on environmental standards to concerns about corruption in China.