May 4 – Finance ministers from members of the Association of Southeast Asian Nations (ASEAN) and Japan, China and South Korea formally presented plans for a US$700 million bond fund during the group’s meeting at Tashkent, Uzbekistan.

The fund aims to spur long-term investment in Asia by facilitating guarantees on local-currency-denominated bonds issued by companies in the region. This will make it easier for companies to issue local bonds and longer maturities when the fund is launched before the end of the year.

The money will be managed as a trust fund called Credit Guarantee and Investment Facility backed by US$130 million dollars from the Asian Development Bank and US$570 million total from the members of the ASEAN and China, Japan, and South Korea, a group also referred to as ASEAN+3.

‘”The facility will make it possible for corporations to issue bonds in their domestic markets and in neighboring markets and across ASEAN+3,” Noy Siackhachanh, an adviser with the ADB’s Office of Regional Economic Integration told Dow Jones. ”Channeling regional savings into regional investments will support economic growth, creating jobs and alleviating poverty,” she added.

It is estimated that the need for credit guarantees in East Asia could amount to US$25 billion by 2020. Ownership rights to the fund will be based on how much each country gives with China and Japan contributing the most at US$200 million followed by South Korea at US$100 million, and the rest of the US$70 million coming from ASEAN members.

The ASEAN group is comprised of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.