Agreement on the Establishment of the ASEAN Development Fund (ADF) ^[*]

To leverage funding of regional cooperation programmes and projects from Dialogue Partners and other external donors. When used for counterpart funding, the amount shall not exceed 20% of the total funding raised regardless of whether the cofunding source is an ASEAN Member Country or an external donor;

To provide seed funding for initial activities of large-scale projects, requiring major financial support from a Dialogue Partner or donor institution; and

To provide full funding support to small and short-term projects of a confidential or strategic nature.

The basic element of the ADF shall be equal contributions by ASEAN Member Countries. The initial contribution of each ASEAN Member Country to the ADF shall be one million US dollars (US$1,000,000). This initial contribution shall comprise the existing contributions of each ASEAN Member Country to the ASEAN Fund. These existing contributions of each ASEAN Member Country to the ASEAN Fund shall be transferred to the ADF upon the Agreement’s entry into force;

ASEAN Member Countries, at any time, are encouraged to make additional voluntary contribution(s) in any amount in addition to their initial contributions;

The ADF shall be open to contributions from other public and private sources. No restrictions or conditions shall be imposed by other public and private sources with regard to the use of their contributions; and

Contributions by the ASEAN Member Countries to the ADF shall be distinct and separate from their contributions to the operating budget of the ASEAN Secretariat, and to other ASEAN funds of a sectoral nature.

The ADF shall be held in trust at the ASEAN Secretariat, subject to the same rules and conditions that are applied to other existing trust funds in regard to investment, disbursement, accounting and auditing procedures.

The ADF will be increased by equal contributions of the ASEAN Member Countries in the amount US$100,000 by the end of the year 2007.

Use of the ADF shall be programmed on a regular basis every two years to realise each of the three pillars of the ASEAN Community and to narrow the development gap among ASEAN Member Countries. Selection of regional cooperation measures to be included in the ADF programme shall take explicit account of the need for: (a) priority measures in realising each of the three pillars of the Community; (b) striking a parallel and balanced development and implementation of the three pillars of the Community; and (c) narrowing the development gap among ASEAN Member Countries so that they could move forward in a unified manner.

The two-yearly ADF programme shall be approved by the ASEAN Standing Committee (ASC) as basis for preparation of specific project proposals for ADF funding support.

Projects seeking ADF support shall be appraised based on criteria including regionality, appropriateness and relevance in the context of the VAP and its successor documents, quality of design, costeffectiveness, and sustainability. Appraisal of projects shall be made by the ASEAN Secretariat Project Appraisal Committee (PAC) based on those criteria. The standard format for ASEAN project proposals shall be used.

Utilisation of the fund is mainly for implementation of programmes, projects and activities identified in the VAP and its successor Plans.

The ADF shall support projects and activities with clearly defined set of objectives and targets within a set timeframe for implementation.

The items of expenditure in a project budget shall be classified into three (3) general categories as follows:

Only the operational costs of the project shall be eligible for support under the ADF.

The capital and administrative costs shall be borne by the Host Government of the project.

Travelling, accommodation and other expenses of delegations attending regular meetings of duly established ASEAN bodies are not eligible expenditures under the ADF.

Approval authority for use of the fund by a project shall be obtained from the ASC taking into account the recommendations of the PAC of the ASEAN Secretariat submitted through the Secretary General of ASEAN, in consideration of the nature of activities eligible for support under the ADF.

The ownership of property acquired as a result of expenditures for financing capital costs as provided for in Paragraphs 10.iii and 12 shall be vested in the Host Government or the ASEAN Secretariat for projects which are hosted by the ASEAN Secretariat.

The ownership of office equipment such as computers, audio-video appliances; laboratory instruments; and the like, acquired as a result of expenditures for financing operational costs of projects shall be vested in the Host Government, or the ASEAN Secretariat for projects which are hosted by the ASEAN Secretariat to help ensure the sustainability of benefits after project completion. The Host Government or the ASEAN Secretariat, as applicable may redeploy property acquired under a project to other projects supported by the ADF under cost- effective arrangements, or it may sell such property when circumstances warrant. Any such redeployment or sale shall be reported by the Host Government or the ASEAN Secretariat, as applicable to the ASC. Any proceeds from the sale of property shall accrue to the ADF.

The Host Government or the ASEAN Secretariat, as applicable may not exercise their right to dispose of any property, the ownership of which has been vested to it under Paragraphs 15 and 16, until after the completion of the project.

The ownership of intellectual property acquired as a result of the project shall be vested in the ASEAN Member Countries. The disposition and use of intellectual property rights shall be governed by guidelines to be determined by the ASC.

All project implementing agencies receiving ADF support for projects of duration longer than six months are required to submit six-monthly financial reports to the ASEAN Secretariat, for consolidation into a regular six-monthly financial statement for review by the ASC.

At the end of a project, a project completion report including a full accounting of all funds received from the ADF shall be submitted by the project implementing agency within 60 days of project completion. Any excess funds unutilised by the project shall be returned by the project implementing agency to the ASEAN Secretariat within 90 days of project completion.

The ASEAN Secretariat shall provide a six-monthly financial statement to the ASC to update ASEAN Member Countries on the status of the ADF.

ASEAN Member Countries or the ASEAN Secretariat may propose amendments at any time to these Guidelines and submit them for consideration by the ASC.

At the end of the period of the implementation of the VAP, any funds remaining in the ADF shall be carried over for the implementation of the successor ASEAN action programmes or for any other related purposes approved by the ASC.