Sat, 13 Jan 2007
From: The Jakarta Post
By Abdul Khalik, The Jakarta Post, Cebu, the Philippines
The Association of the Southeast Asian Nations (ASEAN) is moving rapidly towards a more integrated economy, with some 80 percent of total products in the region having been exempted from all tariffs since Jan 1, an official says.

"We aim to achieve full-pledge economic integration by 2015 so we must continue to cut tariffs on products and services," Herry Soetanto, director general for international trade at the Indonesian Trade Ministry, said Wednesday in Cebu, the Philippines.

He said that tariffs would be lifted on the remaining 20 percent of products by 2010.

"All of the remaining products are sensitive as they are considered strategic for the security of member countries. For instance, we consider rice, sugar, cigarettes and alcohol as being sensitive, so we continue to impose high tariffs on them."

The exemption from tariffs, Herry explained, applied to products that had at least 40 percent ASEAN content.

"Take, for instance, the automotive industry. Now, Proton from Malaysia can export its cars to Indonesia with a tariff of less than 5 percent, or even no tariffs at all," Herry said.

Given the current progress, Herry said he was optimistic that the target of creating a viable economic community by 2015 would be realized.

ASEAN has agreed to form a European-style economic community by 2015, five years earlier than originally planned, uniting the 10-member region into a single market for the free flow of goods, services and investment.

Last December, ASEAN countries inked four agreements to speed up economic integration. The first agreement was the protocol to the ASEAN Framework Agreement on the Integration of Priority Sectors.

Member countries also agreed to eliminate tariffs on 3,523 product lines on Jan. 1 of this year.

Apart from the elimination of tariffs, members will also implement measures to simplify customs procedures; strengthen cooperation on standards and conformity; and enhance facilitation of travel and movement of people within ASEAN.

Foreign direct investment (FDI) into ASEAN during the first quarter of 2006 soared by nearly 90 percent to US$7 billion compared to the same period last year. It rose by 48 percent to $34 billion in 2005, with the manufacturing sector being the top FDI recipient.

Indonesia attracted some $6 billion of last year's FDI inflows to the region, coming a poor second to Singapore's $20 billion.



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