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RI becomes first AIF borrower
The ASEAN Infrastructure Fund Ltd
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he ASEAN Infrastructure Fund Ltd. (AIF) has commencedlending operations with a US$25 million loan to fund power links in Indonesia,becoming a new source of funding for the development of priority infrastructureprojects in the region.
'The start of AIF lending is a critical step toward mobilizing regional resources for infrastructure development in the region,' said Deputy Finance Minister Bambang Brodjonegoro, who is also chair of the AIF board of directors, on Tuesday.
Infrastructure needs in ASEAN countries are projected to be $60 billion a year until 2020. Limited public finances cannot hope to meet the demand and while Southeast Asia has substantial levels of private savings and foreign exchange reserves, these have been largely invested outside of Asia.
'The commencement of lending by the AIF opens a new era in ASEAN-led investments, allowing ASEAN nations the means to direct and leverage resources for their own development needs,' said Ramesh Subramaniam, deputy director general of ADB's Southeast Asia department and AIF board member. 'This is only the first project for the AIF ' we look forward to expanding the project pipeline in 2014.'
The AIF is expected to finance up to $300 million a year for various projects for the development of road, rail, power, water and other critical infrastructure. Projects are selected based on sound economic and financial rates of return, and their potential impact on poverty reduction.
