It's time for the holdouts to embrace new bank

Collaborative investment projects prove bank's impartiality, and cooperative spirit - so US and Japan should sign up now

It is only a year or so since the formal establishment of the Asian Infrastructure Investment Bank, but already attitudes, and even policies, by most of those institutions and countries firmly opposed to its formation appear to have changed completely.

In particular, the once seriously skeptical World Bank and the Asian Development Bank have completely overturned their initial reservations. Both the World Bank and the Asian Development Bank have actually begun to work with the AIIB more and more.

In April last year, World Bank President Jim Yong Kim signed the first co-financing deal with AIIB President Jin Liqun for $1.2 billion (1.1 billion euros; ￡934 million), and since then the AIIB and the World Bank have co-financed five projects. Not only has this cooperation dispelled the myth that the AIIB would pose a threat to the World Bank and other similar institutions such as the International Monetary Fund, but the nature of these collaborative investment projects also demonstrates the impartiality of the AIIB.

There still remains concern, particularly at the International Monetary Fund, that the AIIB has some sort of hidden agenda that puts China and Chinese industry first. But none of these five co-financing deals with the World Bank involve infrastructure development projects in China. A natural gas pipeline in Azerbaijan, power generation in Pakistan and regional infrastructure development in Indonesia head these initial collaborative agreements.

In addition, the AIIB and the International Finance Corp, a member of the World Bank Group, have co-invested in a power sector project in Myanmar and are discussing additional potential projects.

Furthermore, the two institutions are discussing more projects to be co-financed this year and next.

If this cooperative activity between the World Bank and the newly established AIIB, as well as the vast range of geographical areas covered by these initial projects, was not evidence enough of the supportive, complementary role of the AIIB, then the April 23 signing of a memorandum of understanding by the World Bank and the AIIB to strengthen cooperation and knowledge-sharing between the institutions should surely silence any few remaining skeptics.

The United States and Japan, both very much yet to engage with the AIIB, should focus on this memorandum and study the details. If they bother to do so, they will almost certainly be surprised to see that staff exchanges will be a key part of future cooperation and collaboration.

Openness and transparency have been major concerns voiced by both Washington and Tokyo ever since the idea of the AIIB was proposed publicly in 2013. But surely such a broad memorandum of understanding that goes so far as to detail staff exchanges should lay to rest any further concerns.

While the US should view the very recent MOU between the World Bank and the AIIB as well as the co-financed projects very positively and rethink its reticence, Japan has had almost a year since a similar MOU was signed between the AIIB and the Japanese backed Asian Development Bank.

In order for the AIIB to function fully in a complementary role across the Asian region, it is vital for the ADB and the AIIB to work more closely together with co-financing deals similar to those between the World Bank and the AIIB.

Once collaboration with the ADB begins to develop, Washington and Tokyo should then begin to engage more with the AIIB, and, in so doing, accelerate much-needed infrastructure development across Asia.

Despite the fact that the AIIB now has a total of 57 member nations, including close US allies such as the United Kingdom and South Korea, the US and Japan continue to exercise caution.

Instead of distance and disengagement, both the US and Japan need first to acknowledge the strategic blunder made from the inception of the AIIB to the present day and begin to work closely with the AIIB's senior management team.

Should the US and Japan sit down with the AIIB, they will soon appreciate the inclusive, unbiased and complementary nature of this new, vibrant engine of growth across the entire Asian region. A period of increased engagement should then follow, which will benefit the US and Japanese economies as much as any other.

The AIIB will act as a vital umbrella across the region, injecting ever larger capital investment into the poorest parts of the region. If the US and Japan continue to show no commitment and involvement, this could lead to their industry players being disadvantaged and attractive investment opportunities being lost.

A distinctive feature of the AIIB has been its commitment to private sector involvement, and US and Japanese private-sector companies are perhaps best placed to gain here. But without the slightest government commitment toward the AIIB, US and Japanese industry remain at a significant disadvantage. The US and Japan must, without delay or prevarication, rectify this stance and embrace AIIB engagement unequivocally.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer at Southampton University. The views on this page do not necessarily reflect those of China Daily.