Beijing, June 25, 2016

President’s Report to the Board of Governors -2016 Annual Meeting of the Board of Governors Asian Infrastructure Investment Bank

Dear Mr. Chairman, Governors, Ladies and Gentlemen,
I am pleased to report to you today on the Bank’s first months of operation. We prepared a detailed report on the implementation of the 2016 Business Plan and Budget which was discussed by the Directors yesterday. Let me highlight some key points.

At mid-term considerable progress has been made on the strategic institutional and operational priorities, with several of the mid-term performance milestones met, and others are well underway.

The Business Plan targeted lending in the $0.5 billion to $1.2 billion range. I am pleased to report that we are poised to meet, and may exceed this target.

Execution of the budget is proceeding on track. We anticipate a small underrun at year-end largely resulting from timing of staff entry on board, and several major procurements have taken longer than originally envisaged.

Our senior leadership team will soon be complete and mid-level management staffing is underway. As of today, Bank management and staff total 39 and we expect another 20 will join in the next month or so. These staff are supplemented by consultants. Consistent with the Bank’s measured approach to staffing, we anticipate a total staff of around 100 by end 2016.

Turning to our investment portfolio,
As I mentioned earlier this morning, our Board of Directors approved the Bank’s first 4 project loans yesterday financing investments in power distribution and expansion in Bangladesh; road improvements in Tajikistan; highway construction in Pakistan; and slum upgrading in Indonesia. The Bangladesh project was the Bank’s first stand-alone operation, and the other three projects are co- financing operations with the ADB, EBRD and World Bank, respectively.

We expect to bring additional projects to the Board in the second half of the year and are working on the pipeline for 2017.

At the institutional level,
We have put in place most of the core institutional, financial and operational policies and the directives to implement them are in progress. Interim administrative directives support the Bank’s smooth functioning.

A robust risk management framework is under development.

We expect to convene the first meeting of the International Advisory Panel in the fall. These experts will bring varied areas of expertise to provide impartial, objective and independent advice to Management.

Close engagement with our members and our partner institutions are critical to the Bank’s success.
I am pleased to report that initial discussions with members have validated the role and value-added of the Bank and the high demand for its services.

We have developed strong, collaborative partnerships within the MDB community and have signed Memoranda of Understanding to promote cooperation and co-financing with the ADB, EBRD and EIB. And, as I indicated earlier today, AIIB is poised to play an expanded role in global fora.

Ensuring that the Board of Directors is able to exercise oversight and carry out its roles effectively is a critical to the bank’s success.

I am pleased to report that over the past months, we have put the highest priority on ensuring the success of the non-resident Board structure and we have received positive feedback. Our Corporate Secretariat is in continuous consultation with Board members and has undertaken a number of priority initiatives to support Board members in the performance of their duties, including an interactive internet portal which will help real-time communication. And, I am pleased to advise you that the Director of the Compliance, Effectiveness and Integrity Unit, which reports directly to the Board of Directors, is on board, and met yesterday with Directors to hear their views and to initiate a dialogue.

Looking to the future, we will continue to engage and work with our members and other stakeholders to strengthen and deepen the key features which contribute to the Bank’s uniqueness:
Niche market positioning: the Bank aims to be recognized as a financier of quality infrastructure projects with specialized knowledge of the sector and regional markets; expert staff; a results-focused business model; and expertise in cross-border infrastructure. Catalytic Role: an important measure of our success will be the extent to which the Bank can help to raise third-party funds. This is a priority for us and we intend to play a catalytic role in mobilizing additional public and private financing, including institutional investors. Capacity Building: the Bank will help clients to enhance the ‘bankability’ of projects by promoting transparency, efficiency, and adherence to accepted standards, thereby reducing risk. Knowledge Facilitator: the Bank will serve as a knowledge facilitator - enhancing ‘experience- exchange’ among its members on infrastructure policies, trends and developments. Green Investor: As I emphasized earlier today, the Bank places great value on sustainability and will actively seek green infrastructure investment opportunities, including helping our members to meet their Paris Agreement commitments.

The Bank is off to a very strong start. The past months have been fast-paced and productive. In just six months we have together put the fundamentals of a large, modern multilateral financial institution in place, and have made significant progress towards the goals set by you, our shareholders. But we will not allow ourselves to become complacent. The remaining agenda is large, and challenging. But these are challenges that we welcome and embrace. I am confident that with your, and the Board of Directors’ continuing guidance and support, the Bank is fully capable of meeting these challenges.

Thank you.