CIMB-Principal Asset Management Bhd chief executive officer Munirah Khairuddin said the achievement was largely attributable to various incentives and policies of regional governments carried out. (NSTP file pic by ASYRAF HAMZAH)

KUALA LUMPUR: The Asean bond markets are growing in tandem with the progress in Asean economies over the past decade with a combined bond market size of US$1.19 trillion in June 2017.

CIMB-Principal Asset Management Bhd chief executive officer Munirah Khairuddin said the achievement was largely attributable to various incentives and policies of regional governments carried out.

"Among the measures were pertaining to the reduction of withholding tax and improvement in market liquidity, among others, that had positively impacted the markets.

"From the fund management perspective, as an asset class, Asean bond markets are very attractive as yields are relatively higher as compared to bond yields in developed markets.

"Better growth prospects will further result in stronger currency and potential rating upgrade. Government bonds from Malaysia, Thailand, Indonesia and the Philippines are now included in various bond indices such as J P Morgan Emerging Market Board Index (EMBI) which are widely used by global bond investors.

"For Malaysia, the market has a large investor base comprising pension funds, insurance funds, asset management companies, financial institutions and others to provide breadth and depth as well as liquidity in the market," said Munirah.

She was speaking to reporters after the wrapping up of the CIMB Asean Research Institute (CARI) Roundtable Series themed "Broadening investor base in Aseab bond markets" held earlier today.

There was a call to broaden the bond markets investor base to ensure a more diverse and balanced financial systems and financing for infrastructure and other developmental priorities. 

The Asian Development Bank estimates that the region needs US$110 billion in infrastructure expenditure annually until 2025 aa issuancea of long-term local currency bonds will allow infrastructure project owners to match the currency and maturity profile of their financing needs.