South Korea’s membership of the China-led Asian Infrastructure Investment Bank is expected to pave the way for local companies to participate in regional infrastructure projects.

The Korean government is expected to maximize its national interest by seeking a significant stake in the multilateral development financing institution, on par with the country’s economic status.

“Korea is in a position to put forward its views on various (regional economic) issues and make the most of it by offering premium (experiences) to the bank’s founding members for our national interest,” said Choi Hee-nam, Deputy Minister of International Affairs at the Finance Ministry, at a press briefing Friday. 


“Once the AIIB starts its operations, Asia’s large infrastructure market will be opened up to us. Korean companies with ample experience in the construction, transportation and information communications sectors are expected to win business opportunities,” he said.

According to the Asia Development Bank, the annual demand for infrastructure in Asian is estimated at $730 billion, and if China pursues the market with its ever-growing influence, Korea’s sluggish heavy and infrastructure industries will get a boost through such opportunities, government insiders said.

The Inter-American Development Bank for Latin American economies and the Asia Development Bank, led by Japan and the U.S., said they will closely collaborate with the AIIB in several areas to boost regional development.

Seoul announced late Thursday evening that it had sent a letter to Beijing indicating that it will join the AIIB.

Equities of the AIIB, with a starting capital of $100 billion, are expected to be allocated in accordance with the members’ economic output and their contributions to regional growth.

Choi said Seoul is in negotiations with Beijing to acquire stake in the China-led development bank, taking into account South Korea’s No. 3 rank in Asia in terms of GDP, following China and India.

This may lead Seoul to acquire about a 6 percent stake in the bank, market observers said.

“The AIIB will be the first international financial organization in which Korea will take part from the very beginning,” Choi said.

“We will aggressively negotiate to reinforce transparency and sustainability in debt management and other (financial) issues.”

The Korean industry circle has welcomed the decision.

“With 30 countries, including India and the U.K., confirming their willingness to participate, we expect the AIIB to complement the World Bank and the ADB,” the Korea International Trade Association said in a statement.

Some claimed it was imperative for Korea to secure more than a 6 percent stake in order to have its voice heard within the organization and draw further benefits for the country.

“I do not really see any immediate (economic) benefits because Korea’s participation in the AIIB had more do with politics,” said Ahn Ki-tae, analyst at NH Investment & Securities.

“But if China could penetrate the Central Asian market and we join forces with it, we might see some benefits in the future.”

By Bae Ji-sook (baejisook@heraldcorp.com)