Thailand is committed to participating in the Chinese-initiated Asian Infrastructure Investment Bank (AIIB) as a funding source for regional infrastructure megaprojects that would boost economic development.
Yongyuth Maiyalap, a spokesman for the National Council for Peace and Order (NCPO), said the military administration yesterday gave the green light for Thailand to join the AIIB and instructed the Finance Ministry to provide more details about the plan.
The planned bank was first announced by Chinese President Xi Jinping and Premier Li Keqiang during visits to Southeast Asia last October as part of efforts by China to boost its regional clout.
The bank would have start-up capital of US$50 billion, with half contributed by China and the rest by other countries.
After the figure for working capital is reached and paid by member countries according to their financial capability, China proposes doubling the capital of the bank to $100 billion.
Initially, the members will come from Asia, but applications for membership from non-Asian countries will be opened in the future.
The number of potentially participating countries has reached 22, up from 15 in March, including many Asean countries. About 20 other nations, including some in the Middle East and Central Asia, are also eager to engage in the Beijing-led project.
China estimated fund contributions would hit $50 billion within 5-7 years, and the bank would then be ready to become a channel to fund infrastructure projects with a low rate of interest.
The AIIB would have a mandate to fund infrastructure projects in the region, complementing the work of other such entities such as the Asian Development Bank (ADB). It would mainly focus on infrastructure construction in Asia to promote regional connectivity and economic cooperation.
The area of action for the AIIB is huge. The ADB has estimated that the whole of Asia needs about $8 trillion in funds to improve national infrastructure from 2010-20 to sustain its growth trajectory, adding that the ADB can provide about $13 billion in new lending every year.
This has led observers to believe that a China-dominated AIIB would rather cooperate than compete with the ADB and other sources of funds to provide such huge amounts of loans
"The NCPO has realised that infrastructure development is vital to the country's social and economic development," Mr Yongyuth said.
"The investment will also help promote connectivity in the region and strengthen Thailand's status as the centre of regional transportation and logistics."
The potentially participating members of the AIIB are required to propose their intentions to China this month.
Sompop Manarungsan, president of the Panyapiwat Institute of Management, said earlier that China had initiated the AIIB because the world’s second-largest economy wanted to link its economy to the rest of Asia, particularly Cambodia, Laos, Thailand, Myanmar and Vietnam.
It is difficult for these countries to develop rail routes using their own sources of funding, as these projects need high investment, he said, adding that investment in infrastructure projects in these countries could add value to Chinese business in the region.