The Association of South East Asian Nations’ (Asean) infrastructure fund (AIF) is expected to issue US$4bn for Asia’s infrastructure needs by 2020.

The AIF will finance approximately six projects a year, with a US$75mn lending cap for each project. Criteria for investments include its potential to cut poverty, increase trade and bolster investment.

The fund will develop road, rail, power, water and other critical infrastructure needs in Asia, which are estimated at approximately US$60bn a year.

Asean member countries and the Asian Development Bank (ADB) have provided initial equity of US$485mn for the AIF. The ADB will also administer the fund and provide additional co-financing for every AIF project.

“This is a watershed moment for Asean nations working together to finance infrastructure projects that will boost trade, foster economic growth and create more job opportunities for the half a billion people who call Asean home,” says Rajat Nag, managing director general of ADB.

The total lending commitment is expected to reach US$4bn by 2020, but with co-financing by ADB and other financiers, this could be leveraged to more than US$13bn, the ADB says.

Banks will also issue debt via the IAF, which in turn will target the use of the region’s foreign exchange reserves in the future. With Asean countries holding over US$700bn in reserves, the fund could offer an avenue for recycling the region’s resources for its growing infrastructure requirements, according to the ADB.