The China-ASEAN Investment Cooperation Fund, a private equity fund set up by the Chinese government, is looking to increase its investments in the Association of Southeast Asian Nations, especially in influential projects that offer good returns, a top official with the fund said on Tuesday.

"An influential project is one that is sustainable and creates more tax revenues and jobs. It should also have a positive impact on the local community and be well received by the local residents," said Li Yao, chief executive of the fund, at the Asian Financial Forum in HongKong.

"We have difficulty in finding good projects as the estimated investment returns rarely meet our expectations. In addition, the potential risks and transaction costs are high due to the lack of clarity in local government regulations and inefficiencies in the project approval procedures," Li said. The chief executive said that the entire transaction is often a lengthy and drawn-out process. "We want the governments to increase their efficiency and become more transparent," he said.

Established in 2010, the fund is sponsored by the Export-Import Bank of China along with other financial institutions and companies. With a targeted size of $10 billion, it has used the first tranche of $1 billion for investments in 10 projects within the ASEAN region, barring Vietnam and Brunei and realized returns of about $4 billion to $5 billion. The second phase of investment is expected to be in place within the next two years, but the amount is yet to be decided, he said.

The fund is part of the Chinese strategy to deepen cooperation between China and ASEAN countries.

Premier Li Keqiang said in a keynote speech at the 10th China-ASEAN Expo and the China-ASEAN Business and Investment Summit in 2013: "China will initiate a new round of targeted loans, give full play to the China-ASEAN Investment Cooperation Fund, and work actively with various sides to establish a financing platform in Asia to fund large-scale infrastructure projects."

The fund has primarily invested in infrastructure, energy and natural resources and will continue to invest in the three major areas. Based on these investments, it has developed cooperation with local companies in other sectors including agriculture, education and healthcare.

So far, the projects invested by the fund have brought double-digit returns, the chief executive of the fund said. Among the ASEAN countries, the fund plans to focus more on the Indo-China Peninsula and Indonesia.

Countries in the Indo-China Peninsula such as Cambodia, Laos and Myanmar need investments for continued development and they are friendly toward China. Indonesia also has lots of investment opportunities due to its large population of more than 253 million, he said.

China is drawing up a plan for massive investments to promote the New Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, which will deepen its relations and cooperation with ASEAN countries.

"Exporting high-quality production capacity and technologies from China to the ASEAN members will benefit both sides as these countries are similar to China in terms of their economic structure and stage of development," Li said.

He called the fund a forerunner of the "One Belt, One Road" strategy and emphasized that building trust between China and ASEAN is important for Chinese investment.

jiangxueqing@chinadaily.com.cn

(China Daily USA 01/26/2015 page13)