2018 AIIB ANNUAL REPORT AND FINANCIALS

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Our Impact

About 20 percent of Bangladesh’s population doesn’t have access to electricity. Poor power supply decreases the country’s GDP and makes education more expensive. By investing in a combined-cycle power plant in Bhola, we’re helping our client provide low-cost energy to boost the economy and uplift the lives of Bangladeshis.
Over 36 percent of the population in Madhya Pradesh, India live in poverty. Among them are tribespeople, women, children and the elderly who lack road access. We’re helping India connect about 1.5 million isolated people in 5,640 villages to roads that lead to markets, schools, jobs and vital economic and social activities.
India lacks infrastructure financing and has historically faced challenges raising capital through equities. We’re investing in a fund dedicated to infrastructure and related sectors in India to mobilize private capital and encourage institutional investors to develop transportation, logistics, power and urban infrastructure for the country’s 1.3 billion people.
Natural gas consumers in Turkey are increasing by about a million subscribers yearly, yet the country depends heavily on energy imports. We’re helping Turkey improve energy security and storage infrastructure to meet demand while supporting the country’s economic growth and reduction of greenhouse gas emissions.
More than 33 percent of Indonesia’s rural labor force work in agriculture and 60 percent of Indonesians earning less than USD1.25 per day rely on this sector. We’re helping modernize the country’s irrigation infrastructure, benefiting about 887,000 farming households and boosting food security.
Andhra Pradesh, India has about 133,000 kilometers of roads, 60 percent of which are in rural areas far from social and economic centers. Like our project in Madhya Pradesh, we’re helping India improve roads and build new ones. This project will connect about two million people to markets and give women and girls better access to health care and education.
Only 19 percent of Egypt’s rural settlements are covered by public sewerage infrastructure. We’re helping Egypt improve rural sanitation for about 892,000 people in 178,000 households, thus lessening women’s disproportionate burden of household chores and exposure to waterborne diseases.
Despite facing macroeconomic challenges, Turkey’s location, population and urbanization are creating demand for infrastructure projects. We’re helping Turkey provide long-term financing through an on-lending facility for renewable energy projects and other sectors such as transport, water, power and telecommunications.
Poor access to infrastructure prevents Indonesia from realizing its full tourism potential. We’re helping Indonesia develop Mandalika as a tourism destination, potentially creating about 30,000 jobs in direct hotel employment and 60,000 indirect tourism-related employment while promoting women’s equal access to job opportunities.
Water infrastructure is not keeping up with India’s urban growth. We’re helping India improve water supply and sanitation for about 3.3 million people in Andhra Pradesh, thus reducing women and girls’ burden of hauling water from communal taps and lessening their exposure to contaminated water.
Integrating environmental, social and governance (ESG) principles in infrastructure projects is vital to sustainable development. We’re helping mobilize private capital by creating a managed credit portfolio that aims to develop infrastructure as an asset class and promote ESG investment principles in Asia.

2018 at a Glance

OUR MEMBERS

93
69 MEMBERS
24 PROSPECTIVE MEMBERS

OUR PROJECTS

 
35

OUR INVESTMENTS

USD
7.50
BILLION

PRIVATE CAPITAL WE'VE MOBILIZED

USD
715.96
MILLION

OUR PROFESSIONAL STAFF

 
186

OUR FEMALE PROFESSIONAL STAFF

 
59
(32% OF TOTAL)

OUR STAFF NATIONALITIES

 
44

Messages

From Our President
The Asian Infrastructure Investment Bank (AIIB) began operations in 2016 and is now halfway through its fourth year. We are learning and growing very quickly.

Countries from across the world continue to gravitate toward AIIB, resulting in a growing membership. While this is encouraging, it raises a serious question: how can we live up to expectations? We are fully aware of the formidable challenge of meeting the diverse needs of our members and clients who are at various stages of development and from different regions. This is a difficult situation, but such challenges inspire, motivate and drive us to scale new heights and overcome difficulties. We aspire to be a development bank which responds, serves, performs and yields tangible results.

The last three years and a half have been a continuous process of institution building in many respects. A full-scale management system is taking shape. The inspiring chemistry between the Board and Management is further attuned to the needs of running the Bank and our cooperation keeps getting stronger. AIIB is charging forward with new policies being formulated and strategies being hammered out. Operational pipelines are expanding. Investment projects are being approved and executed. Disbursements are being accelerated. Monitoring, risk control and checks and balances are being implemented rigorously. The Bank’s talent pool is deep and efficient. Our highly motivated staff know what AIIB’s shareholders and stakeholders expect of them.

This buildup is in preparation for the challenge of infrastructure bottlenecks, the most palpable of which is the urgent demand for more effective and flexible solutions for bankable infrastructure projects in an increasingly crowded market. Some of the ways we can become a preferred provider of these financing solutions—despite our relative youth in the market—is to stress our focus on infrastructure and other productive sectors for sustainable growth by means of innovative approaches. We aim to provide new financing instruments, flexible structuring for debt and equity and long-term financing—all done at relatively low transaction costs. These are being done while maintaining risk management and high environmental, social and governance standards.

The near-term challenges are real. It is our role as a multilateral development bank (MDB) to step up during times of uncertainty to provide countercyclical lending to keep Asia on track to achieve its long-term goals. We should ramp up our efforts to attract private capital to infrastructure investments, which are usually less alluring due to a long gestation period, high uncertainty and lower rate of return.

This is why MDBs are duty-bound to push for more intense collaboration and cooperation among governments, regulators, public institutions, the private sector and all the other funding sources to make a more meaningful difference in infrastructure development under an enabling environment. For us, it means we need to be a more market- and performance-oriented financier—a facilitator to help smooth the investment process.

This is clearly a daunting task. The tall order is for us not just to satisfy Asia’s need to improve connectivity through infrastructure investments. It is also to help enhance the borrower’s ability to generate revenue, strengthen their debt sustainability and improve the livelihood of their people.

Cooperation with our members
ENLARGE
For many developing countries, debt financing remains an effective approach to achieving economic and social progress through critical infrastructure investment. Yet, high debt burdens can also impede the borrower’s growth and development. This makes it essential for banks and borrowers in both the public and private sectors to manage debt carefully. It is incumbent upon all of us—AIIB and its members—to ensure that fiscal policies would allow for remedies when government borrowing does not align with national economic cycles.

Cooperation with our members should not be limited to ensuring environmental and social sustainability through infrastructure. It should extend to ensuring debt sustainability as well because—in the end—the responsibility jointly falls on both lender and borrower. On both AIIB and its clients.

Such is our role, power and function in improving connectivity and cooperation. We help each other bridge the infrastructure funding gap. And as much as I’d like to stress the impact of the work we do—which this 2018 Annual Report already does succinctly—we face an inflection point for private sector investment in emerging market infrastructure.

And so, we continue to build our institution to fulfill our mission. In 2018 we made renewed efforts to shape our corporate culture. This is an aspect of building an organization that is often more complicated and comprehensive than is generally believed. Culture is fundamental to and permeates across an institution. The leadership both shapes and reflects the culture. And so I have made it an overarching priority to nurture an ethics-based corporate culture. By adhering to basic principles of professional and ethical integrity, we are building a strong foundation upon which AIIB can produce meaningful and measurable results.

As I look to the future of this 21st century bank, I am excited by the opportunity which digital infrastructure presents. Technology’s potential to catalyze infrastructure investment and implementation has yet to be realized to our clients’ satisfaction. Furthermore, technology upgrading is an ongoing process. It can be the link that connects our cities, our energy grids and our transport. It can unlock the potential of both rural and urban residents across the region. We will further explore how digital infrastructure can help us fulfil our mandate.

AIIB is well on its way. We are evolving our capabilities and expanding into innovative financial products. We are building a governance structure rooted in the tradition of MDBs but overlaid with a modern approach to accountability and oversight. We believe this is the right way forward for a development bank designed for the 21st century. To our members, clients, partners and staff: Thank you for accompanying us on our journey. We have only just begun.

Jin Liqun
President and Chair of the Board of Directors

From Our Board of Directors
ENLARGE
From Our Board of Directors
In 2018, the task of mobilizing infrastructure financing faced an increasingly challenging environment associated with both economic and geopolitical developments. And while AIIB is a relatively young MDB, we continue to help our members and clients prepare for uncertainties by finding innovative solutions to infrastructure financing challenges.

To prepare for these challenges, we began by evaluating how we govern ourselves, how we operate and how we aim to serve Asia and beyond. We approved a new governance model that delegates authority to the President to approve selected projects, thus enhancing efficiency and increasing the transparency of the President’s accountability to shareholders. We continued to build a strong risk culture and clear reporting and performance guidelines to reinforce the Board’s oversight role.

We have also strengthened our stakeholder policies—setting clear directions to ensure that concerns of project-affected people are heard and that the public’s need for information are addressed. We formulated new strategies for the transport sector, private capital mobilization, investing in sustainable cities and making nonregional investments. These will further guide and focus AIIB’s operations. We are committed to working with Management to develop the Bank’s corporate strategy, including an effective and fit-for-purpose results monitoring framework.

In 2018, we were granted a “Permanent Observer” status by the United Nations; our triple-A ratings were reaffirmed; we were assigned a “Prime” rating based on environmental, social and governance criteria; and we aligned our approach to helping our members meet their Paris Agreement commitments. Our members totaled 93 by end-2018, and we owe it to them to sustain the achievements we attained last year.

Success entails cooperation and fostering connectivity among our members. Only together can we face the challenges to achieve the future we envisioned when AIIB was established. In our fourth year of operations we will continue to set the stage for this to happen.

Historical Data

  • Year
  • Total
  • Stand-Alone
  • End-2018
  • 35 Projects (Total)

    % Change

    2017 52%
    2016 338%
  • 14 Projects (Stand-Alone)

    % Change

    2017 100%
    2016 600%
  • End-2017
  • 23 Projects (Total)

    % Change

    2016 188%
  • 7 Projects (Stand-Alone)

    % Change

    2016 250%
  • End-2016
  • 8
  • 2
  • Cofinanced
  • Sovereign
  • Nonsovereign
  • 21 Projects (Cofinanced)

    % Change

    2017 31%
    2016 250%
  • 25 Projects (Sovereign)

    % Change

    2017 47%
    2016 257%
  • 10 Projects (Nonsovereign)

    % Change

    2017 67%
    2016 900%
  • 16 Projects (Cofinanced)

    % Change

    2016 167%
  • 17 Projects (Sovereign)

    % Change

    2016 143%
  • 6 Projects (Nonsovereign)

    % Change

    2016 500%
  • 6
  • 7
  • 1
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  • Year
  • Total USD Invested
  • End-2018
  • USD7.500 billion Total USD Invested

    % Change

    2017 79%
    2016 343%
  • End-2017
  • USD4.196 billion Total USD Invested

    % Change

    2016 148%
  • End-2016
  • USD1.694 billion
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  • Year
  • Total
  • End-2018
  • 93 Membership (Total)

    % Change

    2017 11%
    2016 63%
  • End-2017
  • 84 Membership (Total)

    % Change

    2016 47%
  • End-2016
  • 57
  • Regional
  • Nonregional
  • Member-Clients
  • 50 Membership (Regional)

    % Change

    2017 4%
    2016 35%
  • 43 Membership (Nonregional)

    % Change

    2017 19%
    2016 115%
  • 13 Membership (Member-Clients)

    % Change

    2017 8%
    2016 86%
  • 48 Membership (Regional)

    % Change

    2016 30%
  • 36 Membership (Nonregional)

    % Change

    2016 80%
  • 12 Membership (Member-Clients)

    % Change

    2016 71%
  • 37
  • 20
  • 7
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  • Year
  • Total Professional Staff Count
  • End-2018
  • 186 Total Professional Staff Count

    % Change

    2017 42%
    2016 135%
  • End-2017
  • 131 Total Professional Staff Count

    % Change

    2016 66%
  • End-2016
  • 79
  • Female Professional Staff
  • Nationalities Represented
  • 59 (32% of total) Female Professional Staff

    % Change

    2017 40%
    2016 228%
  • 44 Nationalities Represented

    % Change

    2017 22%
    2016 91%
  • 42 (32% of total) Female Professional Staff

    % Change

    2016 133%
  • 36 Nationalities Represented

    % Change

    2016 57%
  • 18 (23% of total)
  • 23
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  • Year
  • Private Capital Mobilized
  • End-2018
  • USD715.96 million Private Capital Mobilized

    % Change

    2017 27%
    2016 14,335%
  • End-2017
  • USD565.96 million Private Capital Mobilized

    % Change

    2016 11,310%
  • End-2016
  • USD4.96 million
  • Special Fund Commitments
  • IOCT Procurement (for AIIB Projects)**
  • USD128 million Special Fund Commitments

    % Change

    2017 19%
    2016 121%
  • USD1,050.5 million IOCT Procurement

    % Change

    2017 19%
    2016 115%
  • USD108 million Special Fund Commitments

    % Change

    2016 86%
  • USD885 million IOCT Procurement

    % Change

    2016 81%
  • USD58 million
  • USD489 million
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* Cumulative as of indicated year-end. Membership numbers aggregated (members plus prospective members).

** For sovereign-backed stand-alone and cofinanced investment projects, in accordance with International Open Competitive Tendering (IOCT) procedures.

2018: The Year That Was

Jan. 16

We celebrated our second anniversary.

Feb. 24

We released our Strategy on Financing Operations in Non-Regional Members.

April 11

We approved our Accountability Framework, a governance model that enhances efficiency and makes our President more responsible and accountable to shareholders.

April 18

We signed a Memorandum of Understanding with the African Development Bank and the African Development Fund to collaborate on sustainable economic development.