ASEAN investment area to be launched in 1998

ASEAN investment area to be launched in 1998

KUALA LUMPUR (AFP): The Association of Southeast Asian Nations (ASEAN) aims to launch an open investment area by the end of next year as part of the region's free trade plan, a Malaysian official said yesterday.

International Trade and Industry deputy minister Kerk Choo Ting said the ASEAN investment area (AIA) was aimed at enabling the free flow of capital among its seven members while easing access to technology and skilled labors.

"The AIA will cover aspects relating to investment promotion, facilitation and liberalization," Kerk was quoted as saying by Bernama news agency after opening a seminar on challenges in the ASEAN Free Trade Area (AFTA).

ASEAN member countries Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, had agreed to jointly promote the grouping as a regional investment location, Kerk said.

They would also consider opening up all industries to investors in the pursuit of a free and open investment regime, he added.

Officials had said the creation of the AIA would strengthen the economic base of ASEAN and turn it into a competitive region with a more liberal and transparent environment to attract greater investment inflows.

Foreign investment in ASEAN countries rose about 65 percent to US$19.6 billion in 1995 from $11.9 billion in 1990, according top official statistics.

Kerk said the grouping had created the ASEAN Industrial Cooperation scheme last April to promote joint-manufacturing activities between ASEAN-based companies.

The scheme, which came into effect in November, eliminates or reduces intra-ASEAN tariffs to a maximum of five percent for imports of approved products, he said.

Kerk said the scheme provided opportunities for local small and medium-sized industries (SMI) to access the ASEAN market while enabling them to enhance their production capacity from economies of scale.

"The SMIs should capitalize on the support of multinationals companies and their larger Malaysian partners to develop their technology, product quality, skills and other capabilities in preparation for AFTA," he added.

ASEAN expects to complete the implementation of its free trade plan by 2000, three years ahead of schedule. The plan calls for lowering tariffs on most goods traded within the region to a maximum five percent by 2003.

Vietnam, which joined ASEAN in 1995, has been given until 2006 to match the tariff cuts of the more mature economies.