Today the Asian Development Bank (ADB) announced that the ASEAN Infrastructure Fund (AIF) had issued its first loan. The US$ 25 million loan will help finance improvements in power transmission between Java and Bali in Indonesia. The ADB and Government of Indonesia will finance the remainder of the US$ 410 million cost of the project.
I wrote about the creation of the AIF in 2011 here and I still think much the same, e.g., that the AIF needs both more funding and institutional support. The AIF has an annual loan portfolio of US$ 300 million, so its resources could easily be consumed by a single project the size of this Indonesian power transmission project. Hence the AIF needs much greater funding if it is serve as a primary lender. On the other hand, if the AIF is to serve as a keystone lender, i.e., the initial source of funding that will attract other financing from private and public sources, then its institutional support has to augmented.
In any event, today is but another small step in the creation of the ASEAN Community. However, that step needs to be followed up with additional financial and institutional support.
I wrote about the creation of the AIF in 2011 here and I still think much the same, e.g., that the AIF needs both more funding and institutional support. The AIF has an annual loan portfolio of US$ 300 million, so its resources could easily be consumed by a single project the size of this Indonesian power transmission project. Hence the AIF needs much greater funding if it is serve as a primary lender. On the other hand, if the AIF is to serve as a keystone lender, i.e., the initial source of funding that will attract other financing from private and public sources, then its institutional support has to augmented.
In any event, today is but another small step in the creation of the ASEAN Community. However, that step needs to be followed up with additional financial and institutional support.
