South Korea on Thursday decided to join the China-proposed Asian Infrastructure Investment Development Bank (AIIB) as one of prospective founding members, the country's finance ministry said.
The Ministry of Strategy and Finance said in a statement that the South Korean Government decided on it after making discussions on the issue among related ministries, before sending a letter about the decision to China.
If South Korea is allowed by other prospective founding members to join the AIIB, the country is expected to sign a formal agreement on it around June, before finally becoming one of founding members of the AIIB, according to the ministry.
The AIIB is a newly-launched multilateral development bank to help finance infrastructure projects in Asia for the sustainable growth and social development in the region, the ministry said.
According to the Asia Development Bank (ADB) data, Asia's infrastructure demand is expected to reach some $730 billion per year by 2020, but the supply of investment funds from the World Bank and the ADB falls far short of the demand.
Thus, the AIIB aims to strengthen economic and financial cooperation among countries in the region and pioneer economic development in the region by focusing on providing funds deficient in the regional development amid the complementary relationship with the existing multilateral development banks, the ministry said.
"In case that the AIIB is effectively in operation, a large-sized market for infrastructure constructions will be open in Asia, " said the statement. "By joining the AIIB, our companies will have greater chances to participate in the projects as the companies have many experiences in infrastructure projects such as construction, communications and transportation."
The ministry said the AIIB would become an international finance agency, in which South Korea participate as one of founding members, noting that South Korea needs to play a more active role commensurate with its economic status in the international community. The AIIB would become an important tool to expand the country's domain in a financial diplomacy, the ministry added.
The ministry said the South Korean Government will make lots of efforts to make the AIIB contribute to the global economic development by helping setting high-level standards that are in line with those of existing multilateral development banks in responsibility, transparency, governance and debt sustainability.
The AIIB is expected to be formally established by the end of 2015, with an initial subscribed capital of $50 billion and an authorized capital of $100 billion.
Twenty-one countries, including China, India and Singapore, signed a memorandum of understating in Beijing in October 2014 to build the AIIB. Six other nations, including Indonesia and Saudi Arabia, joined the China-initiated international body until February 9, 2015.
In March, six other European countries, including Britain, Germany, France and Italy, applied to jointly establish the bank as founding members. The application deadline is on March 31.
(Xinhua News Agency March 26, 2015)