The ASEAN Infrastructure Fund (AIF) is a financing vehicle created to support infrastructure in Southeast Asia. In 2018, two new facilities were created under the fund: the Inclusive Finance Facility, which will promote inclusive growth among ASEAN countries, and; the ASEAN Catalytic Green Finance Facility, which will spur green infrastructure investments in the region. With these two initiatives, the AIF will help ASEAN countries meet infrastructure investment needs, and support them in achieving environmental and climate goals.
ASEAN - one of the world’s most dynamic regions. Its 10 countries together comprise the 5th largest economy in the world, and are home to more than 600 million people.
To sustain growth and prosperity, ASEAN must scale up investments in infrastructure that is accessible and affordable; and with growing environmental challenges, and a changing climate, the focus must be on green infrastructure that supports the Paris Agreement and Sustainable Development Goals.
But the financing needs are immense, and current investment is falling short. Private capital will be essential in bridging the investment gap.
How can ASEAN mobilize the volumes needed?
In 2011, ASEAN member countries and the Asian Development Bank established the regional ASEAN Infrastructure Fund. Today, the fund has invested USD 520 million for infrastructure in the region.
In 2018, the ASEAN Infrastructure Fund created two new facilities as catalysts for inclusive and green infrastructure.
Describing the AIF, Datuk Siti Zauyah Md. Desa, Chair of the AIF Board of Directors, and Deputy Secretary General of the Treasury (Policy), from the Ministry of Finance of Malaysia says, “Malaysia supports the initiative for ASEAN integration and acknowledges the ASEAN Infrastructure Fund (AIF) as one of the important platforms to support economic growth in the region.”
The Inclusive Finance Facility will support critical infrastructure in Cambodia, Lao PDR and Myanmar in the spirit of ASEAN solidarity.
“In the spirit of ASEAN, AIF is the biggest institution that we have, in which we can do big things,” says Freddy Rikson Saragih, AIF Board member from the Ministry of Finance of Indonesia.
The ASEAN Catalytic Green Finance Facility will promote green infrastructure that contributes to ASEAN countries’ environmental and climate goals.
Ramesh Subramaniam, Director General of ADB’s Southeast Asia Department describes the new facility, saying, “The ACGF sits very well in the overall context of meeting the climate change greening imperatives, as well as meeting the gap. The gap is quite huge, and both public and private sector need to work together very closely. So ADB’s proposal is to do exactly that.”
The ACGF combines resources from the ASEAN Infrastructure Fund and other development partners to de-risk green infrastructure projects and attract multiples of private capital for every development dollar spent.
“By providing a pool of financing that can deal with the specific needs of every structure, you essentially create a lot more viable structures,” says Angela Paris Marcarino, Head of the Asia and Pacific Public Sector Division of the European Investment Bank.
By supporting project structuring and de-risking, ACGF will help create pipelines of bankable, green projects.
With these two facilities, the ASEAN Infrastructure Fund now stands ready to help ASEAN strive towards a greener, more equitable future.