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Paper short abstract

The paper examines how the Asian Infrastructure Investment Bank's investments in Indonesia are impacting the political economy of development in that country.

Paper long abstract

Over the past decade, the Asian Infrastructure Investment Bank (AIIB) has become an increasingly important funder of infrastructure development in Asia. Much analysis of the AIIB’s growing role has focused on the weakness of its policies with regards to protection of human rights and environmental sustainability. This analysis has pointed out that the AIIB’s policies have contained many loopholes and disclaimers, confusing and contradictory language, and gaps with regards to human rights and environmental protections. Moreover, these policies have afforded discretion to governments in recipient countries to decide ‘which types of risks to consider (and which ones to ignore) and how precisely to manage those risks’ (Bugalski and Grimsditch 2021). By contrast, this paper examines the impact of the AIIB’s projects on the ground, focusing on the case of Indonesia. In Indonesia, we suggest, the AIIB’s investments have served to benefit the interests of politico-business and state elites in client countries in Asia at the expense of the rights of local communities and protection of the environment and, in so doing, reinforced the predatory, oligarchic, and extractive model of capitalism that has characterised the country’s development in recent decades. Co-financing with the World Bank or Asian Development Bank does not seem to have altered its impact in this respect, perhaps unsurprisingly given that these organisations’ infrastructure activities have also been criticised for their human rights and environmental impacts. To illustrate these points, we examine the AIIB’s engagement in Indonesia’s tourism sector.