MANILA, Philippines - The Association of Southeast Asian Nations (ASEAN) is creating a $485.2-million infrastructure fund, with expectations that it will expand further to $13 billion by 2020. The fund will be used to finance major infrastructure projects across the region.
The initial $485.2 million will be divided with an initial equity contribution of $335.2 million from the nine Asean member nations. The Asian Development Bank (ADB) will provide the remaining $150 million.
According to the ADB, the fund’s total lending commitment through 2020 will be about $4 billion. With a projected 70-percent 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,” he added.
The Manila-based regional lending institution said that the ASEAN countries hold over $700 billion in reserves.
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 Organization for Economic Co-operation and Development (OECD) countries, and dramatically lower electricity and clean water coverage.
Acting ASEAN chair and Indonesia’s Finance Minister Agus D.W. Martowardojo declares that the ASEAN Infrastructure fund will help ensure the 600-million people of the Asean region greater access to energy, clean water and sanitation, and better forms of transportation.
Malaysia is the largest ASEAN contributor with a $150-million equity investment, followed by Indonesia with $120 million.
The Asean Infrastructure Fund is the largest ASEAN-led initiative in ADB’s history, and it is expected to make the Master Plan on ASEAN Connectivity a reality.
The Master Plan on ASEAN Connectivity was issued in 2010. It identifies a series of strategies and actions to enhance physical, institutional, and people-to-people connectivity between member nations.