ASEAN announces infrastructure fund
ASIA: A fund to finance major infrastructure projects was announced by the Association of Southeast Asian Nations on September 24, with Malaysian finance minister Ahmad Husni Mohamad Hanadzlah saying it would 'help forge the road, rail and energy links the region needs to create a greater degree of well-being for its people, and make the Master Plan on ASEAN Connectivity a reality'.
The ASEAN Infrastructure Fund is being set up with an initial equity contribution of US$335·2m from nine ASEAN members and US$150m from the Asian Development Bank. It is expected to finance around six projects a year, 'based on sound economic and financial rates of return, and the potential impact for poverty reduction.'
Total lending to 2020 will be about US$4bn, and through ADB co-financing this is expected to leverage more than US$13bn, helping to mitigating perceived risks which can deter private funding for projects.
'ASEAN nations possess substantial foreign reserves but these funds have largely been invested outside of ASEAN, and outside Asia,' said ADB President Haruhiko Kuroda. 'By establishing the ASEAN Infrastructure Fund, ASEAN is taking a major step towards investing more of its resources in its own development needs.'