AFTA to be set one year sooner

By Meidyatama Suryadiningrat

HANOI (JP): Ministers of the Association of Southeast Asian Nations (ASEAN) gave their stamp of approval on Sunday to accelerating the deadline for the ASEAN Free Trade Area (AFTA) from 2003 to 2002.

The decision came at the end of a Joint Ministerial Meeting between ASEAN foreign and economic ministers held in the Vietnamese capital as a prelude to the sixth ASEAN Summit of leaders set to begin on Tuesday.

Unless it is rejected by the leaders, the decision will be formally announced at the end of the two-day summit.

"We have agreed now it will be 2002. It will be one-year ahead," said Thai foreign minister Surin Pitsuwan.

AFTA aims to create a more liberalized trade area within the region by cutting various tariff lines to between zero and 5 percent.

According to Surin, economic officials are working on various staging processes which will further set yearly deadlines for various tariffs to ensure the 2002 deadline is met.

"They'll look at how much in the first year, 2000, how much 2001, how much 2002," he explained.

Formed in 1967, ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Acceleration of AFTA is part of the initiatives expected to be announced by ASEAN leaders to help attract trade and investment to the economic crisis-hit region.

The initiatives will be submitted to the leaders as the ASEAN Statement on Bold Measures.

"I think the momentum is now quite clear. They want to demonstrate to the world that they want to go into the direction of liberalization.

"And that would be very attractive to outside economies. I'm not talking about Japan, Korea or China. They will be here and certainly pleased to see us moving in this direction, but I mean people from further afield in Europe, America and Australia," Surin added.

Initially economic ministers debated the possibility of speeding up AFTA to 2000 but there was some reluctance to accelerate altogether due to domestic interests.

Indonesia's Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita acknowledged "there were some thoughts about holding back, but in the end we agreed to push forward".

Of the newer members, Vietnam will receive a three-year reprieve on the revised deadline, and Laos and Myanmar five years each.

The core issue of coming up with incentives to attract investors to help boost hard-hit ASEAN economies was central in the work of the economic ministers.

"Given the fact that we are all in trouble, we have decided to make it easier for investors to come in to enjoy the enlarged market," Surin said.

Officials a day earlier also revealed that various incentives would be given to foreign investors who submit applications between Jan. 1, 1999, and Dec. 31, 2000.

While ministers refused to divulge details, it is known it could include a three-year tax exemption on corporate income tax, a 30 percent reduction on individual income tax or an allowance of 100 percent share ownership.

Other expected incentives are reductions in import tax for machinery, and land ownership of up to 30 years.

Another accelerated scheme is the ASEAN Investment Area which is moved up to 2003 from 2010.

Filipino foreign minister Domingo Siazon said other proposals being looked at included the establishment of an eminent individuals group for the private sector.

Another important subject yet to be discussed is the allocation of funds from the US$30 billion Miyazawa aid program for ASEAN members.

"Well there is really no common position on this in ASEAN. It's just that I think that some of them would like better clarification," Siazon said.

ASEAN leaders are expected to discuss the issue with Japanese Prime Minister Keizo Obuchi here on Wednesday.

Obuchi will also announce an additional $8.3 billion loan package to support Asia.

On the political front, no progress was made by ASEAN foreign ministers to admit Cambodia as a member during the summit despite Sunday's arrival here of Prime Minister Hun Sen.

ASEAN foreign ministers were divided on the issue and deferred on the question to their leaders to decide.

Indonesia strongly supports Cambodia's immediate entry. President B.J. Habibie, who arrives Monday, is scheduled to meet with Hun Sen later in the day.

Another sensitive issue was the question of the disputed Spratly islands involving four ASEAN members -- Brunei, Malaysia, the Philippines and Vietnam -- and China.

It is expected that the Hanoi Declaration to be adopted in the summit would make reference to it without directly referring to China.

"Mentioning China by name is not in the declaration. We don't do that," said Siazon.

In closing their meeting, the ministers also finalized the draft of the Hanoi Plan of Action to be signed by the leaders.

The Plan of Action is a six-year blueprint to fulfill the ASEAN Vision 2020.