ASEAN PLANS INFRASTRUCTURE FUND

       Asean plans to set up a US$1-billion(Bt33.5 billion)infrastructure fund and will join Japan, China and South Korea in creating a $500-million bond-guarantee fund for investment in the region, Finance Minister Korn Chatikavanij said yesterday.
       Meanwhile, the Finance Ministry will offer more tax incentives to multinational irms if they choose Thailand as the base for their regional head-quarters.
       The fund plans will be discussed on the sidelines of the annual meeting of the World Bank and the International Monetary Fund, being held in Istanbul from today until Wednesday, Korn said via videoconference from the Turkish city.
       Korn, who is currently chairman of the Asean Finance Ministers, said the 10-member regional grouping would discuss the structure of the infrastructure fund, which will be designed to raise finance and then invest in infrastructure projects in the region.
       The size of the fund could be about $1 billion, he said. Asean will ask for assistance from the Asian Development Bank(ADB)and the World Bank about how to run the fund and how to create bonds rated up to "AAA".
       A high credit rating for the bonds would allow central banks in the region to subscribe to them. The Bank of Thailand, for instance, can invest only in AAA-rated baonds, said Korn. Currently most of the central banks invest in US treasuries.
       Many critics have warned that US dollar assets will tend to depreciate due to the weak US economy.
       Korn also said Asean and East Asia's three largest economies-Japan, China and South Korea-would discuss a plan to set up an East Asian bond-guarantee fund.
       The fund would guarantee bonds issued by local companies in the region in local currencies. The guarantee scheme would support private firms to raise funds from investors at lower cost, the minister said.
       "The big tree - Japan, China and South Korea - have already agreed to put in a combined $500 million for the bond-guarantee scheme," he said.
       The ADB and Asean will consider how much each should contribute to the fund, he added.
       About 70 per cent of the international reserves accumulated by central banks are in the region, which could utilise the money for investment, said Korn,
       Asean and the three countries will also discuss implementation of the reserve pool worth $120 billion that was agreed earlier.
       The reserve pool - known as Chiang Mai Initiative Multilateralisation (CMIM) - will provide emergency financing to members facing an economc crisis like the one that happened in 1997.
       Korn said the office of the CMIM should be located in Thailand.
       Meanwhile, Deputy Finance Minister Pradit Pataraprasit said the ministry would offer more tax incentives and other privileges to lure multinational corporations to set up their regional headquarters here.
       He said that from a survey conducted in 2007, only nine multinational firms chose Thailand as a base for their regional headquarters.
       The top five destinations were Singapore, China, Hong Kong, Japan and South Korea. Singapore and China housed 57 and 56 regional headquarters, respectively.