New Zealand has agreed to become a founding member of the Asian Infrastructure Investment Bank, which is being established to invest in new infrastructure across Asia, Finance Minister Bill English and Foreign Affairs Minister Murray McCully say.

The Bank is a China-led initiative aimed at addressing a significant gap in infrastructure investment in the Asian region.

“Increased infrastructure investment will enhance the Asian region’s growth and that will be good for New Zealand,” Mr English says.

“New Zealand was the first western developed nation to join negotiations to set up the Bank and our membership will enhance our already strong economic, trade and investment links with the Asian region.”

It is envisaged the Bank will have initial capital of close to US$100 billion (NZ$139 billion) to invest in infrastructure projects. It will be financed by individual country contributions proportionate to their economic size.

New Zealand’s paid in capital will be around NZ$125 million, paid over five years.

Mr McCully says Asia is important to New Zealand’s future and therefore it makes sense to contribute to infrastructure investment in the region.

“Asia is driving global growth and it is full of opportunities for New Zealand,” Mr McCully says. “This new Bank will be a welcome addition to existing institutions and it stands to make a significant contribution to infrastructure in the region.

“New Zealand is benefitting from the rapid and sustained development across Asia. To ensure we achieve further growth and that more people in the region are lifted out of poverty, Asia needs to address continuing constraints posed by infrastructure bottlenecks.”

Cabinet agreed in December that New Zealand would join negotiations to establish the founding articles of agreement for the new Bank and to agree on acceptable governance arrangements.

“Those progressed to a point where those conditions have now been met,” Mr McCully says. “The next step will be a formal signing ceremony in Beijing later this month. The Bank is expected to begin operations before the end of the year.”