Manila, January 8

The US-backed Asian Development Bank (ADB) will cooperate with a major new Chinese-led multilateral lending institution and they plan to co-finance projects this year, the ADB’s president said today.

The Beijing-based Asian Infrastructure Investment Bank (AIIB) has been viewed by some as a rival to the World Bank and the Philippines-based ADB, which was founded in 1966.

But ADB President Takehiko Nakao said he did not believe the AIIB, which will launch next week with starting capital of $20 billion, will diminish his institution and they were happy to work together.

“We agreed we can cooperate,” Nakao, told reporters in Manila, adding he already had two meetings with AIIB President-designate Jin Liqun since last year to set parameters for the two institutions’ working relationship.

“(Jin’s) ideas about operations are different, but because of these different ideas, we can complement each other even more.”

Nakao said the two men agreed to co-finance certain projects in the region to address transport and renewable energy needs, and expected to announce specific projects by about the middle of the year.

China’s official Xinhua news agency earlier reported the AIIB, which will launch next week in Beijing, expected to offer its first batch of project loans by mid-2016.

Nakao, former Japanese vice finance minister, would not say how much money ADB would put into AIIB co-financing.

The United States and Japan — the world’s largest and third-largest economies, respectively — have notably declined to join the AIIB.

However, many other major economies, including Germany, Britain, South Korea and Russia, have signed up.

“There are many reasons to do it (join) because Asian developing nation countries need money for financing infrastructure needs,” Nakao said.

Nakao estimated Asia would need $8 trillion to close its 2010-20 infrastructure financing gap, a principal thrust of past ADB lending.

“We welcome any support to us in terms of financing infrastructure,” he said.

Nakao downplayed suggestions the AIIB would erode the ADB’s role in the region.

“I would say this is more a chance for us, rather than eroding ... because we can share our expertise and knowledge and systems,” he said.