The Asian Infrastructure Investment Bank in Indonesia: Reinforcing predatory, oligarchic and extractive capitalism?

The Asian Infrastructure Investment Bank (AIIB) is an increasingly prominent part of China’s growing global footprint. The AIIB is a multilateral development bank established in 2016 to provide funding for infrastructure projects in Asia, formed at the initiative of the Chinese government. It has been headquartered in Beijing, had a Chinese president, and had a governance structure permitting the Chinese government—its largest shareholder—a veto over key decisions. With US$100 billion in capital, it has steadily expanded its loan portfolio, approving financing deals worth more than $USD57 billion by the end of January 2025. The AIIB’s growing role as a source of development finance has been met with significant concern on the part of activists and scholars committed to human rights and environmental sustainability. The AIIB’s stated purpose includes ‘foster[ing] sustainable economic development’ and, to this end, it has expressed a commitment to managing the environmental and social risks associated with its projects in accordance with international best practice. However, critics of the Bank have argued that it has failed to live up to this commitment. In their view, the Bank has often run roughshod over the rights of ordinary people, threatened the natural environment, undermined good governance, and more generally reinforced the predatory, extractive and oligarchic systems of capitalism that characterise many parts of the Asian region. This in turn, they have suggested, has reflected the fact that the Chinese government has privileged building linkages to politico-business and state elites in the region over reducing poverty, ensuring sustainable development, and promoting democracy and human rights. This article assesses these claims in the context of Indonesia, one of the Bank’s largest borrowers. Focusing on the AIIB’s involvement in the Mandalika tourism development project in Central Lombok, an early substantial Bank investment in that country, we argue that AIIB financing has served, as its critics have suggested, to benefit politico-business and state elites at the expense of the rights of local communities; and in so doing, reinforced the predatory, oligarchic, and extractive model of capitalism that has characterised that country in recent decades. However, we also argue that there has been strong contestation of the AIIB’s activities in Indonesia—and the Mandalika project specifically—by an alliance of local community groups, domestic and international NGOs, and UN organisations, undermining the AIIB’s social licence to operate. This holds out some hope that the AIIB will improve its management of social and environmental risks and promote a more inclusive model of capitalism in the future.