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4 October 2009

Asean to set up $1bn infrastructure fund

The Association of Southeast Asian Nations (Asean) plans to set up a $1 billion infrastructure fund, quoted Thai Finance Minister Korn Chatikavanij as saying.

The fund plan will be discussed on the sidelines of the annual meeting of the World Bank and the International Monetary Fund, held in the Turkish city Istanbul from October 3-7, Minister Korn said via videoconference on October 2.

The 10-member regional grouping would discuss the structure of the infrastructure fund, which will be designed to raise finance and then invest in infrastructure projects in the region, said Minister Korn.

Asean will ask for assistance from the Asian Development Bank (ADB) and the World Bank to run the fund and to create bonds rated up to "AAA" - a high credit rating for the bonds – to lure central banks that invest in US treasures, according to the Thai Minister.

Additionally, Asean and Japan , China and the Republic of Korea (RoK) will discuss a plan to set up an East Asian $500-million bond-guarantee fund for investment in the region, he said.

The fund would guarantee bonds issued by local companies in the region in local currencies. The guarantee scheme would support private firms to raise funds from investors at lower cost, the minister said.

The three East Asian largest economies agreed to put in a combined $500 million for the bond-guarantee scheme, he added.

The regional grouping and the three countries will also discuss implementation of the reserve pool worth $120 billion that was agreed earlier.

The reserve pool - known as Chiang Mai Initiative Multilateralisation (CMIM) – is aimed to provide emergency financing to members facing an economic crisis.


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