South Korea will seek a stake in the China-led investment bank that matches the country’s economic size and capability and maximizes its national interest, the finance ministry said Friday.
After eight months of deliberation, Seoul announced late Thursday it will join the Asian Infrastructure Investment Bank as a founding member.
The basic rule is for stakes to be distributed according to the GDP of member states and contributions to the eventual authorized capital set at $100 billion.
The ministry said, however, that like other international financial organizations, gross national income, per capita income, foreign reserves size, trade volume and other factors may play a part. The AIIB stakes for regional and non-regional members, as well as minimum shares allocated to smaller countries, will also be factors that affect South Korea’s eventual holding, it said.
Excluding China, South Korea ranks No. 2 in terms of GDP size among the Asian members, although this may fall one notch if Australia opts to join.
“By joining the AIIB before the March 31 deadline, Seoul is now in a position to put forward its views on various issues and take advantage of the premium offered to all founding members,” Choi Hee-nam, deputy minister of international affairs at the ministry, said.
Guidelines and charters for the bank’s operation and the related anex are due to be determined before the end of June.
Talks are expected to focus on the voting rights of each country that will have influence in the bank. Emphasis will likely be placed on who gets to sit on the board and the prospective locations of some of the AIIB’s regional offices. The headquarters of the bank will be located in Beijing.
The ministry said that while some concerns still linger about the governance structure and transparency of the AIIB, progress has been made.
Last year, there were speculations that China would have the final say on all decisions made by the investment bank, but through negotiations, this authority has been transferred to the board of directors, which will not be so easily swayed by a single country, the ministry said.
The fact that China may not foot 50 percent of the authorized capital could further weaken that country’s influence, it said. The AIIB expects some 35 countries to become founding members.
Other officials said China has pledged to address the so-called safeguard issue such as environmental protection, labor and women’s rights when the final agreement is forged.
On past talks with the United States, which had expressed serious reservations about its allies joining the AIIB, a ministry official said there have been talks on all fronts and at all levels from the finance minister down to working-level general directors.
“Washington has said that the final decision rests with Seoul, and they have even acknowledged that there are investment-related demands that South Korean companies have the capability to meet,” the official said.
He explained that North Korea could receive future funding from the AIIB if a motion is passed by a general meeting of its shareholders. The country, however, cannot join the infrastructure bank because it is not a member of the ADB or World Bank, which is one of the prerequisites for membership. (Yonhap)
