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MANILA, Philippines – The Asian Development Bank announced Thursday, May 3, the establishment of the Asean Infrastructure Fund (AIF), the largest financing initiative for the Association of Southeast Asian Nations.
The AIF for the 10-member bloc aims to help fund crucial infrastructure needs in the region such as road, rail, power, water and other critical projects, which are estimated to cost about US$60 billion a year, according to ADB Managing Director General Rajat Nag.
“This is a watershed moment for Asean nations working together to finance infrastructure projects that will boost trade, foster economic growth and create more job opportunities for the half a billion people who call Asean home,” said Nag.
The ADB and Asean member-countries have provided an initial equity of $485-M for the AIF. The Philippines contributed an initial $15 million, Nag told a press conference on the sidelines of the 45th ADB Board of Governors Meeting here.
Indonesia has contributed $120-M, while Malaysia has given $150-M. Nag said the ADB would provide additional co-financing for every AIF project through long-term loans of 15 to 20 years. ADB will be administering the Fund.
6 every year
The AIF’s total lending commitment through 2012 is estimated to be approximately $4-B, which with co-financing by ADB and other possible financiers, could reach up to $13 billion.
In a separate statement, the ADB said the Fund will finance approximately 6 projects a year, with a $75-M lending cap per project.
Nag said criteria for investments include their potential to “cut poverty, increase trade and bolster investments.” Possible projects include roads, bridges and other infrastructure needs deemed crucial in spurring investments.
The Fund plans to issue debt which is targeted to utilize the region’s foreign exchange reserves. “With Asean countries holding over $700 billion in reserves, the Fund could offer an avenue for recycling the region’s resources for its growing infrastructure requirements,” the ADB said. – Rappler.com
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