The Global Opportunity of a Lifetime? How to Benefit from the New Asian Bank Wars

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One of the least-noted yet most significant events this decade – possibly even this century thus far – was the 4th October 2014 launch of the Asian Infrastructure Investment Bank (‘AIIB’) in Beijing, China. This new institution has US$100bn in capital and is a direct rival to the Asian Development Bank (‘ADB’), a venerable lender which has been active for almost fifty years; although the ADB is headquartered in Manila, it is very much a Japan-driven vehicle.

The inception of the AIIB has stimulated the ADB – total assets, US$116bn – to wade into a fresh round of action: on 4th July 2015, Japanese Prime Minister Shinzo Abe promised US$6.1bn of additional aid as part of a move to augment Japanese and ADB funding for infrastructure projects by 25%; earlier this year, the ADB announced plans to increase annual operations by 50%. The indications are that the overwhelming majority of Asian countries will be happy to play off the ADB and the AIIB against each other: 42 states (there are 48 UN members in Asia) are affiliated to both banks.

After some contemplation, we at Mediolana believe that the New Asian Bank Wars could have the following effects which both individuals and companies worldwide can profit from:

  1. Job Creation. Given that both the ADB and that AIIB are principally infrastructure banks, it is realistic to assume that most of the loans they issue will actually go towards productive capital investments, rather than, say, propping up financial institutions with questionable balance sheet fundamentals. This means that an unprecedented demand for talented creatives in regions such as South-East Asia is on the cards, and entities should position themselves accordingly.
  2. New Markets. Funding projects such as subway lines in Jakarta will not merely have local effects on construction, transportation and retail: they will create a new mindset and new markets. Anyone looking to sell any product or service should be aware that while there will always be pronounced social and cultural differences – especially internationally – there are new audiences just waiting to be informed about you.
  3. Increasing Competition. The Asian Development Bank made education one of its five core operation areas in Strategy 2020, the long-term strategic framework of the Asian Development Bank for the 2008 to 2020 period. The AIIB is almost certain to follow the ADB’s lead in prioritising education, meaning that the pool of talented and trained people from which universities and employers can choose will continue to grow. Students everywhere need to prepare themselves for an era of intense competition.

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Filed under Economic Development, Economics, Education

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