ADB to tie up with India and China for ASEAN Infrastructure Fund

Multilateral funding agency, Asian Development Bank (ADB), is keen to rope in India and China in the newly created Association of Southeast Asian Nations (ASEAN) Infrastructure Fund for funding infrastructure projects in the region.

The ASEAN Infrastructure Fund has a corpus of $750 million, of which ADB's contribution is $150 million.

“ We will be happy to see India and China put a fraction of their reserves in the fund. The ASEAN infrastructure fund is already operational, but we would like it to be Asia Infrastructure Fund. But, that would take some time,” said Rajat Nag, managing director general, ADB at the Look East Economic Summit, Indian Chamber of Commerce (ICC), here on Friday.

The Asean Development Fund’s total lending commitment through to 2020 will be about $4 billion. With projected 70 per cent co-financing by ADB, it is expected to leverage more than $13 billion in infrastructure financing by 2020, according to a press release at the ADB website.

According to ADB estimates, over the next decade ASEAN economies will require approximately $60 billion a year to fully address the region’s infrastructure needs.

Malaysia, which has chaired a series of High-Level Task Force Meetings since July 2010 to establish the Fund, is the largest ASEAN contributor with a $150 million equity investment, followed by Indonesia with $120 million, according to a press release by ADB in September 2011.

The master plan on ASEAN Connectivity, issued in 2010, identifies a series of strategies and actions to enhance physical, institutional, and people-to-people connectivity between member nations.The Asean infrastructure Fund will finance approximately six infrastructure projects each year. These will be selected based on sound economic and financial rates of return, and the potential impact on poverty reduction.

In India, ADB aid it would keep its annual sanction limit at $2 billion (each year) for financing Indian projects over the next three years, said Nag.