MANILA - Vietnam is set to get the biggest loan so far from the ASEAN Infrastructure Fund (AIF), set up by Southeast Asian nations and the Asian Development Bank to boost infrastructure development in the region, AIF board members said on Friday.
Also, the AIF is looking to increase its $500 million capital via a bond issue in 2016 or 2017, with regional central banks as possible investors, Bambang Brodjonegoro, Indonesia's vice minister of Finance and chairman of the AIF, told Reuters on the sidelines of the World Economic Forum on East Asia.
The board of the AIF approved this week a pipeline of projects to be financed from the fund, including a $100 million loan to a power transmission project for Vietnam, said Ramesh Subramaniam, deputy director general of the Asia Development Bank's Southeast Asia department and AIF board member. He said the projects would be submitted for ADB board approval in July.
The power project will be the single biggest under AIF financing, he said. The ADB will lend another $200 million and the Vietnamese government will finance the rest of the project's total required financing of about $380 million.
The AIF, funded by equity from members of the Association of Southeast Asian Nations (ASEAN) and the ADB, was created in 2012 to lend about $300 million a year to infrastructure projects.
But with infrastructure needs in Southeast Asia projected at $60 billion a year until 2020, there is a need to increase the AIF's capital base.
The fund is preparing for credit rating analyses that will support a successful bond sale that could attract the central banks of China, Japan, South Korea and other countries, Brodjonegoro said. A bigger capital will allow it to also lend to the private sector or state-owned enterprises undertaking public-private partnership projects.