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Asean moves to make

region more competitive

SINGAPORE: The Association of Southeast Asian Nations (ASEAN), concerned to maintain its attraction to investors, on Saturday signed an industrial cooperation pact and considered formation of an ASEAN investment area.

The ASEAN Industrial Cooperation (AICO) scheme was signed by ministers after a two-day ASEAN economic ministers' meeting. ASEAN groups Brunei, Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines.

The scheme would be implemented within two months, ASEAN Secretary-General Ajit Singh told reporters after the signing.

A press statement said AICO aimed to encourage firms located and operating in ASEAN countries to cooperate in the manufacture of AICO-approved products and to attract investments from non-ASEAN countries.

"It provides an institutional framework within which ASEAN private sectors may collaborate on the basis of mutual and equitable benefits.as well as to enhance the technology base, economies of scale and competitiveness of ASEAN industries," the statement said.

The scheme allows participating companies to enjoy preferential tariffs of zero to five percent.

This is equivalent to the accelerated benefits stipulated under an ASEAN Free Trade Area (AFTA) which would come into effect by 2003, the statement said.

Other incentives include local-content accreditation. Approved AICO products may be finished products, intermediate parts and raw materials.

Initially, the scheme is open only to manufacturing companies incorporated and operating in ASEAN countries. But as the programme is widened to other sectors, each company must be at least 30-percent owned by a national ASEAN government.

During their meeting, the ministers raised concerns about the dwindling rate of foreign investment into ASEAN.

The competition from China and India was especially fierce, they said.

Conference delegates said China's and India's share of foreign investment into Asia had risen from 23 percent in 1989 to 59 percent in 1994, while ASEAN's share had dipped from 44 to 28 percent.

To counter this trend, the ministers considered forming an ASEAN investment area, first mooted by Singapore's premier Goh Chok Tong at the grouping's summit in Bangkok last December.

Thailand's Deputy Premier Amnuay Viravan said, "We feel that ASEAN needs to make the region more attractive because capital is a free-flowing commodity and goes to places where it can earn the highest profits.

"You have now many other attractive investment areas in the region, especially China and India. So ASEAN has to work harder to make the area more attractive."-Reuter