ASEAN KEY DESTINATIONS
Asean seeks to set up infrastructure fund
Southeast Asian countries plan to set up an infrastructure finance mechanism, the latest move to extend regional cooperation in the face of the global financial storm, Reuters quoted Malaysia's deputy prime minister as saying Monday.
Najib Razak said the 10 members of the Association of Southeast Asian Nations needed to co-operate to mobilise their large pool of savings to help fund infrastructure projects at a time when capital is scarce and budgets are under pressure.
"As past experience has highlighted, the building of capacity to manage financial risks is very critical to contain the potential spill-over effects infrastructure projects may have on fiscal expenditures," said Najib, who will take over as Malaysia's prime minister in March.
The smaller export-dependent economies of Asia are expected to see growth fall in 2009 and budget deficits look set to rise as they seek to offset lower growth.
In Malaysia, growth is forecast to slide to 3.5 percent of gross domestic product in 2009, the lowest level since 2001.
The move from Asean, which groups Cambodia, Malaysia, Indonesia, Singapore, Vietnam, Philippines, Laos, Thailand, Myanmar and Brunei, came after China announced a near-$600 billion boost to its economy.
The Asian Development Bank believes that regional spending needs on infrastructure could be as much as $583.1 billion from 2006-2015 and Najib noted that there was $340 billion a year in gross national savings generated each year in Asean.
But underdeveloped capital markets meant that money was not channelled efficiently and, while intra-Asean trade has boomed in recent years, regional cross-border capital flows were less efficient, Najib said.