Thursday, October 22, 2009

Leaders likely to approve Asean infrastructure fund

CHA-AM : A planned Asean infrastructure fund to channel the region's savings into infrastructure investments is likely to be endorsed by Asean leaders at their summit this weekend.

Commerce Minister Porntiva Nakasai said the fund would mainly finance infrastructure development and road networks to facilitate production and logistics.

Deputy Commerce Minister Alongkorn Ponlaboot said that China and Japan had also proposed to participate in the fund but details were not disclosed.

Finance Minister Korn Chatikavanij earlier proposed each country contribute to the fund based on its readiness, with financing from direct budget allocations, foreign reserve holdings or even private-sector investments.

Countries could tap the fund to finance domestic infrastructure plans, with the Asian Development Bank a guarantor for bond issues.

However, at an Asean economic ministers' meeting in August, China promised a US$10-billion China-Asean Investment Co-operation Fund to support infrastructure, notably for road, rail and port facilities where gaps existed in the region.

Mr Alongkorn said the China-Asean fund could supplement the Asean fund in which the Japan International Co-operation Agency(JICA) has also proposed to participate.

He said Thailand had proposed two road projects linking Mae Sot with Mawlamyine in Burma via Myawaddy, and Kanchanaburi and Dawei in Burma.

In a related development, Asean economic ministers also agreed to speed up the development of customs procedures, tariff systems and technology under the Asean single-window scheme to facilitate trade, and a green lane to facilitate transport in order to reduce production costs.

Arin Jira, chairman of the Asean Business Advisory Council, said the private sector also urged governments to set up an SME Fund to provide soft loans to help liquidity-starved small businesses.

Asean governments are also being urged to accelerate cutting import tariffs under the Asean Free Trade Area, especially for the agricultural sector, in which most rates are due to fall to between zero and 5% next year.

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