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NEWS UPDATES Asean Affairs   5 April  2012

US$ 4B Asean Fund may help  Indonesia infrastructure projects

4 April, 2012

Funding for development projects in Indonesia is expected from the newly pledged  Asean infrastructure Fund under the Indonesia-Malaysia-Thailand Growth Triangle (IMT GT) cooperation, according to the Indonesian trade minister.

Speaking to reporters after the IMT GT meeting during the Asean Summit in Phnom Penh yesterday, Trade Minister Gita Wirjawan said that he hoped Indonesia would be able to use the funds to finance major development projects across Sumatra, which has been named as one of the focus areas under the growth-triangle cooperation.

Last week, Asean finance ministers pledged to launch a project in May to channel US$4 billion to member countries by 2020.

The initial $485.2 million is to be provided by the Asean member countries and the Asian Development Bank.

The Asean Secretariat had proposed the idea of prioritising the funds for use in IMT GT projects during the summit, Gita said.

Asean members also agreed to the new implementation blueprint of the IMT GT, which will form the guidelines from 2012 to 2016.

Launched on July 20, 1993, in Langkawi, Malaysia, and later seen as a support to the Asean Connectivity master plan, the IMT GT initiative aims to speed up economic growth in the border areas of three countries.

Southern Thailand and northern Malaysia shares a land border and Indonesia’s Sumatra Island is separated from Malaysia by the Malacca Straits.

The IMT GT initiative focusses on six sectors: infrastructure and transport, trade and investment, human resource development, agriculture, agri-based industry and environment, tourism, and halal products and services.

The sub-region covers 14 provinces in southern Thailand, eight northern states in Malaysia and 10 provinces of Indonesia: Aceh,
Bangka Belitung, Bengkulu, Jambi, Lampung, North Sumatra, Riau, Riau Islands, South Sumatra and West Sumatra.

Under the initiative, for example, toll roads connecting Binjai, Medan and Tebing Tinggi in North Sumatra and a highway linking Aceh, on the northern part of Sumatra, and Palembang in South Sumatra will be built.
The Belawan Port in North Sumatra and Dumai Port in Riau will also be upgraded.

Gita said that Indonesia planned to link the infrastructure projects that were to be built under the IMT GT initiative with projects from the government’s own master plan on the acceleration and expansion of Indonesia’s economic development, MP3EI.

Last year, the government launched the master plan that will be carried out from 2011 to 2025 to speed up infrastructure development, as part of a long-term plan to increase the country’s gross domestic product (GDP) to around $4.5 trillion by 2025.

Gita said that in line with the new blueprint, Indonesia, as one of the major stakeholders, would ensure that the planned development of physical-infrastructure projects in its territory goes ahead.

"Up to present, we see that the infrastructure projects have been mostly realised in Malaysia and Thailand,” the minister said, adding that setting up ports and Ro-Ro ferry services were among the highly required projects. During the summit, Asean member countries have also stepped up efforts to consolidate free trade agreements with the regions’ main trading partners, with Indonesia being appointed to take the lead in the process.

Gita said a working group would be set up to discuss the steps to realise the commitment this month, with the first focus on trade in goods.

Asean has agreed to establish a framework for a regional comprehensive economic partnership that will engage with six countries already sealing free trade agreements. They include Australia, China, India, Japan, South Korea and New Zealand.

The proposed Asean +6 trade pact has been slated to become the world’s largest regional economic bloc.

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