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ASEAN

ASEAN creates new infrastructure fund

(ADB release) The Association of Southeast Asian Nations (ASEAN) is creating a new fund to finance major infrastructure projects across the region.

The ASEAN Infrastructure Fund is being set up with an initial equity contribution of $485.2 million, of which $335.2 million will come from nine ASEAN members. The remaining $150 million is being provided by the Asian Development Bank (ADB).

The Fund’s total lending commitment through to 2020 will be about $4 billion. With projected 70% co-financing by ADB, it is expected to leverage more than $13 billion in infrastructure financing by 2020.

“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.”

Over the next decade ASEAN economies will require approximately $60 billion a year to fully address the region’s infrastructure needs. On a per capita basis, they have only a fraction of the roads and railways found in Organisation for Economic Co-operation and Development countries, and dramatically lower electricity and clean water coverage.

“The ASEAN Infrastructure Fund will help ensure the 600 million people who call our region home will have greater access to energy, clean water and sanitation, and better forms of transportation,” said Agus D.W. Martowardojo, acting ASEAN Chair and Indonesia’s Finance Minister.

The Fund will be based in Malaysia as a limited liability company.

The Fund will finance approximately six infrastructure projects each year. These will be selected based on sound economic and financial rates of return, and the potential impact on poverty reduction. A unique feature of the Fund is that it will eventually issue debt eligible for investments from central bank reserves.

ADB will administer the ASEAN Infrastructure Fund, and will ensure that safeguards and due diligence are an integral part of financed projects.

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About Samantha Magick

Journalist and editor

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