The Council of Ministers agreed on Friday to invest about $62 million in the fledgling Asian Infrastructure Investment Bank (AIIB), which is expected to start operating by the end of the year.
Cambodia agreed to become a founding member of the China-backed bank, which aims to have a total capital of $100 billion to spend on infrastructure projects across the region, in late June.
“Cambodia will purchase 623 shares, equivalent to 0.0635 percent of the total capital, worth $62.3 million,” said a statement on Friday’s meeting posted to the Facebook page of Council of Ministers spokesman Phay Siphan.
“The government decided to participate in the founding of the Asian Infrastructure Investment Bank [AIIB] to provide Cambodia with a new source of long-term financing in addition to the financial sources of existing development partners,” it added.
Cambodia will make the payments to the bank in installments over the next 10 years and in return will get just over 0.3 percent of the vote as a bank member.
China decided to establish the AIIB as a result of unsuccessful efforts to gain a bigger say in the World Bank and Asian Development Bank, which are traditionally dominated by the U.S. and its ally Japan, respectively. Observers see the AIIB as Beijing’s attempt to both challenge those lenders and expand its influence across Asia by investing more in the region’s infrastructure needs, which the ADB pegs at $8 trillion through 2020.
Cambodia’s decision to invest in the AIIB comes after the World Bank in 2011 placed a freeze on all new lending to the country to protest a Chinese-backed real estate project that forced some 3,000 families out of their homes around Phnom Penh’s Boeng Kak lake.
Rights groups worry that the AIIB may not adopt and abide by the social and environmental safeguards of the other multinational lenders. Prime Minister Hun Sen has often praised China, already the country’s biggest investor, for decoupling such concerns from its lending practices.
