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November 11, 2008
Asean seeks to set up infrastructure fund



November 12, 2008

Asean needs no infrastructure fund – Malaysia
There is no issue with regards to financing infrastructure in the Asean region as it is flush with liquidity due to gross national savings in excess of $300 billion, Malaysian national news agency Bernama quoted a government minister as saying Tuesday.

Second Finance Minister, Nor Mohamed Yakcop said that beyond Asean, there remained large pockets of liquidity in countries such as China, India and the Middle East.

"With a large and rapidly growing young population, there remains significant demand for greater infrastructure and a basis for strong project cash flows," he said at the Asean Infrastructure Financing Mechanism Conference in Kuala Lumpur Monday.

He said it had been estimated that investments of $30 billion are required annually for infrastructure development in the region.

"To drive the Asean infrastructure financing, we need to ensure good project cash flows and effective management of risks. Project risks should be shared on an equitable basis and intermediated through the capital markets to
reduce the concentration of risk," he added.

Nor Mohamed said that increasing private sector involvement in infrastructure projects can assist in building the country's domestic private sector while developing the capital market.

According to him, Asean countries could also collaborate to fast-track the  creation and growth of listed companies through cross-listings on other Asean exchanges.

The scale of infrastructure projects would also promote corporate development through building management capacity and ensuring new start-ups quickly adapt to internationally-benchmarked standards for corporate governance and accounting.

"This in turn, could facilitate an increased level of cross-border intermediation activities of advisors, listed companies and financial intermediaries, thereby accelerating the process of intergrating Asean's capital markets," he said.

He added that regional cooperation on infrastructure represents a "win-win" strategy for all in Asean, particularly during these challenging times by pooling together the diverse strengths of Asean member countries to further
enhance economic resilience.

"Malaysia feels strongly that the economic growth of any country would gain substantially from infrastructure development. We believe that the Malaysian experience can be successfully replicated throughout the rest of the region," he added.

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