The Beijing-based Asian Infrastructure Investment Bank is setting up a department focused on healthcare and education infrastructure after the coronavirus pandemic exposed the region’s weaknesses in the area.
The AIIB had long been considering a healthcare unit but Covid-19 accelerated its plans, said Erik Berglöf the bank’s chief economist, who is working on the new department’s launch.
“Definitely, Covid has shown the importance of the primary healthcare system in offering resilience to pandemics,” Mr Berglöf told the Financial Times. “We saw that in many countries in Asia, the basic healthcare system didn’t hold up very well. That’s clearly something that needs to be addressed.”
The new department is a shift for the development bank, which in the four years since its establishment has focused on financing infrastructure projects in sectors such as energy, transport and water.
In April, the AIIB extended a $355m emergency loan to China supporting the public health response to Covid-19 in Beijing and Chongqing, the institution’s first foray into the sector.
The bank, which is hiring a director-general to head the new “social infrastructure” unit, is aiming to appoint vital staff before the end of the year.
Mr Berglöf said it was too early to disclose the new department’s financing target. But the AIIB would initially co-finance healthcare and education projects and consider standalone projects in the longer term as it built experience.
The bank has not identified the unit’s first projects but was considering areas such as supporting infrastructure to improve the safety of wet markets or sewage surveillance to track a pathogen’s development, Mr Berglöf said. Chinese authorities have traced the country’s coronavirus outbreak to a live animal market in Wuhan.
The AIIB has set aside a total of $13bn to support governments during the pandemic, of which more than $6bn has already been invested. The Manila-based Asian Development Bank has announced a $20bn package, including about $2.5bn in concessional and grant resources.
Some analysts see the bank as a means for China to strengthen its regional influence, a notion rejected by the institution.
China has engaged in vaccine diplomacy across Asia amid the pandemic and in recent years has pushed its contentious Belt and Road Initiative — its grand plan to build and finance infrastructure across the globe.
But by moving into health and other areas, the AIIB might be able to broaden its appeal, some analysts said.
“Adding ‘soft’ infrastructure projects to its portfolio opens the possibility of the AIIB becoming a ‘one-stop shop’ for regional development,” said Ayşe Kaya, associate professor of political science at Swarthmore College. “This will increase the institution’s competitiveness and help distance it from China’s contentious Belt and Road Initiative.”
Some Asian countries including China, Vietnam, South Korea, Singapore and Thailand appear to have the virus under control thanks to sound healthcare systems and experience in fighting Sars.
But others have failed to contain the pathogen, with India counting the second-highest number of cases in the world at almost 9m and Indonesia topping the south-east Asian ranking with more than 450,000 cases.