ASEAN launches infra fund in ADB event

May 3, 2012 10:29 pm 

MANILA, May 3 — Finance ministers of the Association of South East Asian Nations (ASEAN) launched Thursday the ASEAN Infrastructure Fund (AIF) with an initial pooled equity amounting to US$ 485 million.

In a briefing at the sidelines of ADB’s 45th Governors Meeting being hosted by the Philippines at the Philippine International Convention Center (PICC), ADB Managing Director General Rajat Nag said government projects are the initial beneficiaries of the AIF in the next five years and lending commitment is targeted to reach US$ 4 billion by 2020.

He said critical infrastructure projects like road, rail, water and power will be the main focus of the AIF, which was instituted in line with the bid to recycle the ASEAN region’s about US$ 700 billion reserves to address the region’s increasing infrastructure requirements.

“Basically we will follow the criteria that they have poverty reduction impact, increase trade, boost investment and enhance regional connectivity,” he said.

Nag said each project that would be submitted for financing will not have a cap and would be demand-driven.

This statement was supported by ADB South East Asia Department Director Arjun Goswani during the same briefing.

“Our objective is to have a diversified fund to try and give as many countries as possible access to it. I think overtime it’s going to happen,” he said.

Relatively, Nag said AIF wants to build a good lending track record to eventually issue debt in the future to further increase its funding base and include non-sovereign projects as its beneficiaries.

Aside from ADB other sources of fund for the AIF are each ASEAN member countries, which are expected to pool in about US$ 13-14 billion by 2020.

Nag also cited that since ADB will be involved in each AIF project this will give an assurance to investors and the general public alike “that each project have gone through due diligence, has gone through social safe-guards, environmental safe guards, and resettlement aspects of each projects.”

“Each project that AIF will finance will essentially have international best practices,” he added. (PNA)

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