Beijing: China has invited Japan to join the Asian Infrastructure Investment Bank, a brainchild of the Communist nation for which 27 countries including India have signed up to be its founding members.
The chance to be an Asian Infrastructure Investment Bank (AIIB) founding member is available for all Asian countries including Japan by March 31, Chinese Finance Minister Lou Jiwei told a media briefing here today.
Japanese government has been updated with the result of talks among the bank's current founding members, Lou said.
"They told us they are considering. Whether Japan will join, we do not know. It is Japan's own decision," he said.
Japan, Australia and South Korea have not joined the AIIB and the US has expressed reservations over its transparency.
India has joined the initiative to set up the Bank floated last year by China to step financing of infrastructure projects in the region.
The bank to be headquartered in Beijing is expected to be operational this year.
The authorised capital of AIIB is USD 100 billion and the initial subscribed capital is expected to be around USD 50 billion. The paid-in ratio will be 20 percent, according to the MOU.
The bank together with BRICS Development Bank and USD 40 billion Silk Road development fund established by China was expected to fund large number of infrastructure projects in the region.
Lou said some European countries, including major ones, have expressed the intention to join it.
But current founding members agree that AIIB will consider Asian countries first and the membership of countries outside the region will be the next step, he said.
Currently 27 countries have confirmed to join AIIB, an initiative proposed by China.
Vice Finance Minister Zhu Guangyao told media Tuesday that the bank will be set up within 2015.
"It is hard to predict how many countries will join in the future. It is not up to China but all founding members," Lou said.
Without naming any country, Lou said some countries wanted to get privileges, but such issues have to be discussed and finalised by all the founding members.
While there is huge potential, how much and how soon it is harnessed will depend on the overall economic momentum and the acceptance of REITs as an investment vehicle, he said.
The Budget proposed to rationalise capital gains tax for the sponsors of newly-created business structure REITs, provided the sponsor will be given the same treatment on offloading of units at the time of listing as would have been available to him if he had offloaded his shareholding of the special purpose vehicle at the stage of direct listing.
"Exchange of shares of SPV (special purpose vehicle) for units of REITs would happen at market value and could result in profit in the hands of the sponsor, which could entail tax liability in the hands of sponsor under the provisions of minimum alternate tax.
"Since exchange of shares for REIT units can merely set up REITs and is not per se a commercial transaction, the government may consider exempting the same from MAT," he said.
He further pointed out that in case the SPV is primarily funded by share capital, normal corporate taxes would be applicable at the SPV level and any distribution of profits by the SPV would entail distribution taxes. Exemption from distribution taxes should be provided to the SPV to the extent it distributes dividends to the REIT.
"REITs present an interesting opportunity to securitise the critical real estate sector and effectively make real estate a tradable commodity. While some more clarifications are still needed, we should see launches by mid-2016," said Hariani managing partner, Ameet Hariani.
In a report, leading financial services firm JM Financial Group said the gold deposit scheme and REITs can help monetise 1 percent of GDP for productive investments.
"Savings in non-productive physical assets, primarily property and gold, is 17 percent of GDP... A well-run gold monetisation and REITs scheme can recycle one per cent of GDP, which can revive the savings rate in the financial and help fund investments," it said in a report.
REITs have market size potential of USD 50 billion with a return profile of 13-14 percent pre-tax, the report added.
