AIF Mulls Bond Issue To Fund Operations

By Azizul Ahmad KUALA LUMPUR, March 20 (Bernama) -- A financially self-sustaining ASEAN Infrastructure Fund (AIF) plans to issue bonds as a debt instrument to raise additional funds for its operations, says Treasury Secretary General Dr Mohd Irwan Serigar Abdullah. Infrastructure projects could be financed through innovative bond structures and AIF will start working on getting a good rating first, said Mohd Irwan. "We haven't decided on the quantum, we should work on preparing for the good rating first," he said, sharing the outcome of the ASEAN deputy finance ministers and central bank deputy governors meeting Thursday. The meeting, which discussed ASEAN economic growth, was a prelude to the 19th ASEAN Finance Ministers' Meeting (AFMM) which commenced Friday. Mohd Irwan said AIF estimated it would require US$12 billion to address selected ASEAN infrastructure investment needs over a 10-year period. Apart from entering the debt market, the AIF is also considering borrowing from pension funds, said Mohd Irawan. The AIF is a dedicated fund established in 2013 by the Asian Development Bank (ADB) and nine ASEAN member countries to finance projects that promote infrastructure development. The fund was incorporated as a limited liability company in Malaysia in April 2012, and became fully operational in 2013. Shareholders now include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, and ADB. Malaysia has contributed US$150 million to the fund, bringing total shareholders’ total equity commitment to US$485.3million (US$1=RM3.70). "Part of AIF had funded three projects, in Indonesia and Vietnam, while some other infrastructure projects in the pipeline are also being considered," said Mohd Irwan. He said in May, Malaysia will start taking over the AIF's chairmanship from Indonesia. A Bernama check with the ASEAN secretariat showed that a total of US$165 million from the fund has been approved to fund a power transmission project and a sanitation project, both in Indonesia, as well as a power grid development project in Vietnam. -- BERNAMA