MANILA - THE Asian Development Bank said on Wednesday it would invest US$140 million (S$213 million) in an Indonesian government-backed fund to support vital infrastructure projects in that country.

Conceived in 2007 and also supported by the World Bank, Australia and Japan, the fund was designed to provide long-term loans, equity or guarantees for building roads, power plants and other major infrastructure projects urgently needed by Indonesia.

The fund was launched last month in Jakarta.

The announced ADB investment includes US$40 million for a 20 per cent equity stake in the fund, called the Indonesian Infrastructure Financing Facility, and a 25-year loan of up to US$100 million to the state-owned infrastructure holding company PT Sarana Multi Infrastruktur.

'There is a huge gap between needed infrastructure investments and the available financing. That has significantly constrained the expansion of crucial infrastructure in Indonesia,' said Arjun Thapan of the ADB's South-east Asia department.

The fund 'will finance commercially viable infrastructure projects by offering long-term financing and by providing the intellectual capital needed to catalyse public-private partnerships', said Philip Erquiaga of the bank's private sector operations department.

'By limiting its exposure to 20 per cent of the cost of any project, (the fund) is expected to finance up to US$5.5 billion of projects in its first five years of operations,' Mr Erquiaga added. -- AFP