New Zealand's Parliament on Thursday passed legislation enabling the country to become a founding member of the China-led Asian Infrastructure Investment Bank (AIIB).

Finance Minister Bill English welcomed the passing of the International Finance Agreements Amendment Bill, saying the decision to join would help build and consolidate New Zealand's economic and political relationships in Asia.

"Our involvement in the negotiations to establish the bank has contributed to the emergence of a genuinely multilateral 21st Century institution with New Zealand continuing to play a useful role including advocating for good governance and high lending standards," English said in a statement.

"Asia is incredibly important to New Zealand's future. The region is full of opportunity for New Zealand and our strong ties with Asian countries mean we are well placed to take advantage of those opportunities."

The AIIB was being established to foster sustainable economic development and to promote regional cooperation and partnership and was expected to begin operation early next year.

New Zealand was the first Western developed country to join negotiations to establish the bank and signed up in June.

New Zealand's paid in capital would be around 125 million NZ dollars (82 million US dollars), paid over five years.