WELLINGTON, June 15 -- The New Zealand government announced Monday that the country will invest 125 million NZ dollars (87.27 million U.S. dollars) in the China-led Asian Infrastructure Investment Bank (AIIB) paid over five years.

New Zealand has agreed to become a founding member of the AIIB, which is being established to invest in new infrastructure across Asia, Finance Minister Bill English said in a statement.

The bank aimed to address a significant gap in infrastructure investment in the Asian region, which would enhance the Asian region's growth and in turn be good for New Zealand, English said.

"New Zealand was the first Western developed nation to join negotiations to set up the bank and our membership will enhance our already strong economic, trade and investment links with the Asian region," said English.

It was envisaged the bank would have initial capital of close to 100 billion U.S. dollars to invest, which would be financed by individual country contributions proportionate to their economic size.

Asia was important to New Zealand's future so it made sense to contribute to infrastructure investment in the region, Foreign Minister Murray McCully said in the statement.

"Asia is driving global growth and it is full of opportunities for New Zealand," McCully said.

"This new bank will be a welcome addition to existing institutions and it stands to make a significant contribution to infrastructure in the region," he said.

"New Zealand is benefiting from the rapid and sustained development across Asia. To ensure we achieve further growth and that more people in the region are lifted out of poverty, Asia needs to address continuing constraints posed by infrastructure bottlenecks."

The next step would be a formal signing ceremony in Beijing later this month, and the bank was expected to begin operations before the end of the year.