T

he finance ministers of ASEAN have agreed on several moves to safeguard the region’s economic stability amid growing global uncertainties that could lead to potential crises.

“We look forward to fully implementing the US$700 million Credit Guarantee and Investment Facility [CGIF] in May 2011, and we welcome the progress made toward the establishment of the ASEAN Infrastructure Fund (AIF) to support infrastructure financing in the region,” finance ministers from the ten member countries said in a joint statement released Friday after the 15th annual ASEAN Finance Ministers Meeting in Nusa Dua, Bali.

The CGIF, a collaborative effort of ASEAN plus three nations and the Asian Development Bank (ADB), will guarantee local-currency-denominated corporate bonds issued by private companies in the region and will lower borrowing costs, making it easier for firms to issue local bonds with longer maturities.

ASEAN — Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — will contribute a combined $70 million, with Indonesia chipping in $12.5 million. China and Japan are the biggest stakeholders, with each contributing $200 million, while South Korea will chip in $100 million and the ADB $130 million. Ownership rights will be proportionate to capital contributions.

Bambang Brodjonegoro, acting fiscal chief of the Indonesian Finance Ministry, read the joint statement at a press conference, saying that for Indonesia the CGIF was part of the government’s effort to expand the corporate bond market as foreign investors still prefer to invest in government bonds.

“Temporarily, the CGIF will operate at ADB’s office in Manila. But we still need to wait for confirmation from the Philippines government,” Bambang told reporters after the conference.

The ASEAN finance ministers have also agreed “in principle on technical design and contributions of about $485.2 million from both ASEAN member states and the ADB in the ASEAN Infrastructure Fund (AIF).

“This will strongly demonstrate the strength and commitment to ASEAN solidarity and consensus toward sustaining growth, facilitating physical connectivity and narrowing the infrastructure development gap in ASEAN,” the ministers said in the joint statement.

The infrastructure fund, aimed at boosting infrastructure investments in the region, is expected to kick off later this September, with Indonesia being the second largest contributor with $120 million. Malaysia is the largest contributor at $150 million.

“Additional fund contributions are also open for all contributing participants ... All ASEAN members have agreed that this is an important issue for the region,” Bambang said.

Indonesia is gearing up to intensify campaigns to promote infrastructure projects this year to solve bottlenecks that have hampered economic acceleration in the country, with an estimated need for Rp 1,923.7 trillion in funds for medium-term infrastructure projects to 2014 to support President Susilo Bambang Yudhoyono’s economic master plan.

The finance ministers’ agreement on the CGIF and AIF mark a stronger collaboration on the region’s path towards the planned integrated ASEAN Economic Community by 2015. Southeast Asian nations have also agreed to establish a new financial supervisory body that will limit dependency on the International Monetary Fund (IMF).