Home » Breaking News, Customs & Trade » $13-B ASEAN infrastructure fund to aid regional connectivity

The Association of Southeast Asian Nations and the Asian Development Bank (ADB) have set up a US$485.2 million ASEAN fund to promote infrastructure development in the region and support ASEAN economic integration. The funding will be used to finance major regional projects by next year and is expected to e eventually grow to $13 billion.

The ASEAN Secretary General and finance ministers and the president of ADB signed the ASEAN Infrastructure Fund (AIF) Shareholder Agreement late September 2011 in Washington, D.C.

Dr. Surin Pitsuwan, Secretary-General of ASEAN, called the AIF “an innovative financial architecture … timely for the region as it explores various financing mechanisms to support the ASEAN Economic Community by 2015.”

Through the AIF, the ASEAN member-states and ADB will pool funds and ASEAN reserves to support regional infrastructure growth and the Master Plan on ASEAN Connectivity (MPAC).

The MPAC, adopted last year, identifies a series of strategies and actions to enhance physical, institutional, and people-to-people connectivity.

“With ASEAN countries holding over US$700 billion in reserves, the AIF offers an avenue for mobilizing the region’s resources for its growing infrastructure requirements,” said Surin.

The AIF will have an initial equity contribution of $485.2 million, of which $335.2 million comes from ASEAN and $150 million from the ADB. The fund is expected to finance about six projects each year starting next year. The AIF’s total lending commitment through 2020 will be roughly $4 billion.

The fund will finance selected public-private partnership projects and hopes to attract even greater foreign capital flows to the region. According to the latest ASEAN Investment Surveillance Report, FDI flows in the region doubled to $75.8 billion last year from $37.8 billion in 2009, and for the first time, more than $12 billion of those flows were sourced within ASEAN.

“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 Martowardojo, acting ASEAN chair and Indonesia’s finance minister.


Photo by Tracy O

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