AICO tax breaks ineffective

AICO tax breaks ineffective

JAKARTA (JP): The chairman of the ASEAN Chambers of Commerce
and Industry, Aburizal Bakrie, said yesterday tax breaks given
under the ASEAN Industrial Cooperation (AICO) scheme were
ineffective because only a few countries could get the benefits.

"ASEAN governments are asking the private sector to have a
bigger role in the region's economy but they are not providing
effective guidelines for us to do this," Aburizal said at the end
of the First ASEAN Business Summit.

AICO aimed to promote joint industrial manufacturing
activities between ASEAN companies. A minimum of two companies
from different ASEAN countries are needed to form an AICO
arrangement.

The arrangement provides an umbrella association for the
companies and gives their products a preferential tariff rate of
between zero percent and 5 percent.

The preferential tariff rate also applies to imported
intermediate products and raw material used in manufacturing.

The scheme covers all products except those exempted from the
common effective preferential tariff scheme.

Aburizal said ASEAN governments should be more serious in
establishing policies if they wanted businesses play a bigger
role in intra-ASEAN trade.

He said no AICO scheme had been approved so far even though
AICO was founded in the early 1990's.

Meanwhile, ASEAN Secretary-General Ajit Singh said it would be
ironic if foreign businesses seized the initiative and derived
greater advantages from the ASEAN Free Trade Area and AICO rather
than ASEAN businesspeople.

"As it is now, many non-ASEAN businesspeople, especially the
Japanese, are busy preparing applications for AICO approvals," he
said.

In order to form an AICO arrangement, companies must be
incorporated, operate in ASEAN, have a minimum 30-percent
national equity and undertake resource-sharing, pooling or
industrial complementation activities. (pwn/rid)