TOKYO -- Asia's two leading multilateral lenders are not competitors but rather complementary partners in a region whose funding needs are too great for any one source to fill, executives from both banks said at the Future of Asia conference on Tuesday.
"There is a huge need for infrastructure finance, so there is no means of competition," said Stephen Groff, a vice president at the Asian Development Bank, often seen as a rival to the Chinese-led Asian Infrastructure Development Bank.
From 2016 to 2030, the region will need an estimated $1.7 trillion in annual infrastructure investment, about half of which remains unfunded, Groff said.
"There is a history of cooperation between our institutions and I expect that kind of cooperation will continue in the future," he added.
Groff pointed out that the two banks have different focuses and strengths. Poverty reduction is at the core of the ADB's mission, and policy support constitutes 25% of the Manila-based lender's portfolio.
On the other hand, the AIIB focuses on meeting funding needs for infrastructure projects in the region, which Vice President Joachim von Amsberg called "very critical ... for stimulating economic and social development." China recently urged the ADB to help finance Beijing's Belt and Road infrastructure initiative.
The AIIB and ADB have jointly financed some projects so far, despite being seen as symbolizing China-Japan rivalry. The two representatives also said they have known each other for 10 years and "talk a lot" with each other.
Masumi Kakinoki, senior executive vice president of Japanese trading house Marubeni, suggested that multilateral cooperation can help reduce the geopolitical risk associated with infrastructure investment. He said that projects cannot maintain continuity when political situations change if funding is dependent on one country.
Kakinoki referred to a solar power project in Abu Dhabi, where Marubeni invests together with a Chinese corporation and the Abu Dhabi government. "I think we served as a bridge between the Abu Dhabi government and China" and "there will be more projects coming in the future," he said.
While Asia's demand for infrastructure financing is great, the extent of corruption in some countries worries foreign investors.
The AIIB's Amsberg said that the effectiveness and credibility of local governments is essential to the success of its projects, and that the Beijing-headquartered bank can do its part to fight against corruption in these countries.
"We need governments which are accountable and ultimately work for the benefit of people. You can't do large-scale infrastructure without a strong and effective government," he said.
"We, as multinational development banks, have a particular role in helping strengthen governments to play their roles effectively," he added.
For example, AIIB can press local government officials to make credible commitments to private investors and demand more transparency in administrative practices, Amsberg said.
Amsberg said that while Beijing does not have veto power over individual projects, it has sufficient voting rights to prevent fundamental changes to the bank.
In operation since 2016, the AIIB counts 86 members, including all of the Group of Seven industrial economies except Japan and the U.S.
While the word infrastructure usually conjures up thoughts of bridges and railroads, the panel also discussed the importance of "soft" infrastructure and digital technologies. Yuri Sato, executive vice president of the Japan External Trade Organization, suggested that digital infrastructure can tackle social problems.
Digitization could help overcome the side effects of urbanization for "people left behind" in remote areas, as well as congestion and natural disasters.
Nikkei staff writers Sadayasu Senju, Hayato Sawa, Marie Shimokawa and Ryotaro Yamada contributed to this article.