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)