With more than 50 countries signing up for founding membership to the China-led Asian Infrastructure Investment Bank (AIIB), a new world economic order may well be in the making - one that showcases Asia's fast-growing role, and China's bid to increase its heft in the international monetary system.
Singapore too may be able to play a key role.
Joining AIIB, which is envisioned as a multilateral lender that could finance billions of dollars worth of infrastructure investment across Asia - is a natural step towards positioning Singapore as a project finance hub for ASEAN, says Mr Tham Sai Choy, managing partner of KPMG in Singapore and chairman of KPMG's Asia-Pacific region.
Singapore is already a successful global financial centre with many international banks operating here, and infrastructure financing is a natural extension, he said. Singapore can share best practices in implementing infrastructure projects. "The country can differentiate itself by 'softer' contributions. For example, it can share its know-how in enhancing institutional capacity, manpower training, and in establishing more efficient structures and processes," Mr Tham says.
Making the case for AIIB
Singapore aside, the case for the AIIB looks strong.
For one thing, it fills a clear gap in infrastructure financing.
Years of under-investment in infrastructure in the region has resulted in a deficit estimated at US$600 billion (S$797 billion) per year, KPMG's Mr Tham notes.
With a seed capital of US$100 billion, the AIIB can help ensure that needed infrastructure is built, he says. That can help close income disparities within and between countries in the region.
According to the Asian Development Bank (ADB), an estimated US$8 trillion over the period from 2010-2020, or US$750 billion per year, is required to fund Asia's infrastructure requirements. The ADB lends only about 1.5 per cent of this amount.
Although the ADB and World Bank are already actively involved in regional development financing, the existing arrangements, are not up to the scale of the challenge, says HSBC economist Joseph Incalcaterra.
"For example, in the Philippines, India and Indonesia, populations continue to expand at a rapid pace, putting pressure on everything from education to healthcare to environmental protection. That leaves few funds left to build the nuts and bolts of a growing economy: transportation and water management are only two of the main challenges facing officials in emerging Asia," he says.
Some experts also say the AIIB can improve on the weaknesses of the existing World Bank and ADB.
Senior research fellow Cecilia Tortajada from the Lee Kuan Yew School of Public Policy and Professor Asit K. Biswas, a visiting professor at the same school, call the AIIB "a new alternative to traditional sources of international development funding".
"Properly structured, it could learn from and avoid the mistakes of the World Bank and ADB. It could reflect broader and more appropriate mandates, and adopt better governance practices. It would not be bound by tradition or historical precedents and may even develop new and more effective financing mechanisms," they said in a recent report.
They see the AIIB potentially forcing the World Bank and ADB to "rethink some of their unnecessary lending restrictions and streamline their project approval, preparation and implementation processes".
Reflecting China's new-found global clout, Britain and Group of Seven allies such as France and Germany, along with Australia and South Korea signed up to the AIIB - despite the United States' objections.
So far, the US and Japan have opted not to join, warning that the AIIB has yet to embrace global standards on governance, debt sustainability and environmental considerations established by the Bretton Woods institution, the World Bank. The US continues to back the ADB, a Japan-dominated regional lender.
But some experts say these arguments are red herrings used to preserve the status quo, and the new competition could well force the ADB and World Bank to undertake reforms that have been long overdue.