2015/SFOM13/012 Session: 2 ASEAN Infrastructure Fund: Progress Update Purpose: Information Submitted by: ADB 13 th Senior Finance Officials Meeting Bagac, Philippines 11-12 June 2015
ASEAN Infrastructure Fund: Progress Update APEC Senior Finance Officials' Meeting (SFOM) 11-12 June 2015
CONTENTS OF PRESENTATION BACKGROUND PROGRESS IN 2013-2014 KEY TASKS IN 2015 SUMMARY 2
1. BACKGROUND (part 1) In 2006, ASEAN Finance Ministers called for a fund which uses foreign exchange reserves for development financing ADB was asked to provide support in 2009, and responded with technical and financial support Shareholders agreement was signed in September 2011 ADB has three important roles: (i) Administrator; (ii) Co-financier; and (iii) Shareholder. All ADB policies will apply to the AIF operations and administration. 2013 marks the beginning of operations Myanmar recently joined all ASEAN members are now shareholders of the AIF. Malaysia, ADB, and Indonesia remain to be the largest shareholders. 3
1. BACKGROUND (part 2) Core Equity ASEAN 55% AIF 30% Hybrid Capital 25% ADB 20% Equity & Debt for AIF Debt (FX reserves) 60% Equity 40% AIF is registered in Labuan, Malaysia in 2012, and became operational in 2013. It is the largest ASEAN-led financial initiative. It utilizes the equity and debt (target use of foreign exchange reserves). AIF will lend around $300 million per year in ASEAN. With cofinancing from ADB, AIF will finance +$1 billion in projects. ADB 70% AIF+ADB Lending Emphasis on regional projects to support the AEC 2015 goals. 4
1. BACKGROUND (part 3) Key criteria for AIF financing include: 1. National priorities in physical infrastructure projects 2. Regional impact if possible (not mandatory) 3. ADB cofinancing (with ADB as lender of record) 4. Sovereign operations / including sovereign guaranteed projects 5. Country exposure ( capital adequacy and exposure limits ) 5
6 2. KEY ACHIEVEMENTS IN 2013 Governance Indonesia as the AIF Board Chair (2013-2015). Meetings in May and November 2013. ADB s reports and briefing as the AIF Administrator. A series of ongoing technical analyses. Directors liability insurance. Financial Management 2 nd tranche equity contributions. 3 rd and final tranche in 2014. Financial audit:2012 (2013 ongoing). Investment and Liquidity Management Framework. Operations AIF s first project (Java-Bali Power Interconnection Project) in December 2013. Additional projects for 2014 (Indonesia, Philippines, Viet Nam). Reduction of AIF loan pricing (approved in November 2013). Other Matters Requests for formal partnerships from other development partners (private sector). Emphasis on PPP development in the region. Dissemination activities.
2. KEY ACHIEVEMENTS IN 2014 Entrance of Myanmar as a full member (AIF Board Meeting in Yangon in December 2014). Beginning of lending operations: (i) INO-Java Bali Power Transmission ($25M); (ii) INO-Metropolitan Water and Sanitation ($40M); and (iii) Hanoi-HMC Power Interconnection ($100M). Technical analyses and policy formulation to support effective administration. Completion of equity contributions from all members. AIF Equity Contributions Unit: US $ ASEAN 335,300,000 - Brunei Darussalam 10,000,000 - Cambodia 100,000 - Indonesia 140,000,000 - Lao PDR 100,000 - Malaysia 150,000,000 - Myanmar 100,000 - Philippines 15,000,000 - Singapore 15,000,000 - Thailand 15,000,000 - Viet Nam 10,000,000 ADB 150,000,000 Total 485,300,000 7
3. KEY TASKS FOR 2015 Project Pipeline Continued efforts for building a strong pipeline of projects. Diversification of the country allocation. Financial Management Completion of 3 rd and final tranche in 2014. Financial audit:2013. Capital Adequacy and Exposure Limits Framework. Technical Issues Credit rating prospects Project pipeline development for all ASEAN members Other technical tasks Other Matters Framework for engagement of external stakeholders. Board meetings in May and November 2015. Guidance from the ASEAN Finance Ministers Meeting (Marc h 2015) 8
4. SUMMARY AND NEXT STEPS (part 1) List of AIF Board Members Brunei Darussalam: Mozart Brahim, Ministry of Finance Cambodia: Pen Thirong, Ministry of Economy and Finance Indonesia: Freddy Rikson Saragih, Ministry of Finance Lao PDR: Angkhansada Mouangkham, Ministry of Finance Malaysia: Dato Mat Noor Nawi, Ministry of Finance Myanmar: Maung Maung Win, Ministry of Finance Philippines : Maria Edita Z. Tan, Department of Finance Singapore: Teo Eng Cheong, International Enterprise Singapore Thailand: Kulit Sombatsiri, Ministry of Finance Viet Nam: Nguyen Manh Hoa, Ministry of Finance Asian Development Bank: Ramesh Subramaniam 2014 marks the first full year of operations. Price adjustments adopted to meet the needs of the borrowing countries. On track for policy objectives of mobilizing regional savings. Continued consensus support needed from all members. Much attention from other initiatives and institutions on the success and design technicalities. Importance for ASEAN and supports the goals of the AEC 2015. 9
4. SUMMARY AND NEXT STEPS (part 2) Additional information: http://www.adb.org/site/aif/main AIF promotional video: 10