Asean to get $25bn loan from China ANOTHER $10BN TO BE OFFERED IN THE FORM OF A FUND FOR EMERGENCY USE

Writer: PHUSADEE ARUNMAS

Published: 16/08/2009 at 12:00 AM

Newspaper section: News

China yesterday agreed to provide a US$15 billion (510 billion baht) loan to help Southeast Asian countries with infrastructure development and another $10 billion in the form of an emergency investment fund to help the region cope with future economic crises.

China's Commerce Minister Chen Deming shakes hands with Commerce Minister Porntiva Nakasai to seal the deal.

Beijing made the pledges in a meeting between Asean commerce ministers and their Chinese counterpart Chen Deming.

The loan will be used to improve transport and telecommunications infrastructures in the region, said Commerce Minister Porntiva Nakasai, who chaired the meeting.

Railway connections between Kunming in southern China to Vietnam, Laos, Thailand, Malaysia and Singapore will benefit from the injection of cash, which will also be used to boost trade, investment and tourism between Asean and China.

The Asean Secretariat will prioritise the infrastructure projects that will benefit from this loan.

Details would be hammered out at the Asean summit in October.

As for the $10 billion emergency fund, China hoped that it will help Asean solve its future economic problems.

Asean and China also signed the Asean-China Investment Agreement yesterday, which the two sides have been negotiating since 2003.

The agreement will expand trade and investment and will come into effect on Jan 1.

Mr Chen called the agreement a "milestone" in fostering trade and investment ties between China and Southeast Asia.

Ms Porntiva said she hoped the accord will also benefit trade and investment between Thailand and China.

China is the eighth largest investor in Asean with a total investment of $60 billion. Last year, investment from China rose 125% from 2007.

In a related development, Asean ministers and their counterparts from China, Japan, South Korea, Australia, New Zealand and India supported efforts to turn their countries into a free trade area.

According to a study by an expert group, the free trade area of 16 countries would boost GDP by 1.3%.

Thailand's economic growth would rise 4.8% and the Asean economy would grow 3.8% once the 16 countries have been turned into one free trade zone, the study said.

Also yesterday, Asean and South Korea agreed to set up a special fund to support cooperation schemes including projects aimed at reducing the economic gap in Southeast Asia. South Korea contributed $1.5 billion to the fund.

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