ASEAN makes plans to woo more investments

ASEAN makes plans to woo more investments

KUALA LUMPUR (AFP): Heads of ASEAN investment agencies called
yesterday for greater intra-regional cooperation as they opened
talks on how to woo foreign funds amid a sharp drop in capital
flowing to the region.

The heads are to draw up programs to implement ASEAN's Plan of
Action on Cooperation and Promotion of Foreign Direct Investment
(FDI) and Intra-ASEAN investment.

The Association of Southeast Asian Nations (ASEAN) must remain
competitive to woo more foreign direct investments funds, ASEAN
secretary-general Ajit Singh said at the opening of the two-day
meeting.

Singh noted that between 1991 and 1994, the regional
grouping's share in total FDI flows to Asia dropped from 62
percent to 31 percent.

"If this trend continues, ASEAN economies may find it
difficult to sustain their pace of industrial development and
economic momentum," he warned, adding that FDI played a "very
significant role" in the development of the region.

Economic ministers of ASEAN, which groups Malaysia with
Brunei, Indonesia, the Philippines, Singapore, Thailand and
Vietnam, had drawn up what they called a bold regional initiative
on investment -- the ASEAN Investment Area at their meeting in
Singapore in April.

Some of the investment programs include joint promotion
seminars, joint training, simplification of rules and increasing
transparency of ASEAN members' guidelines.

Singh said he was aware of the competition among ASEAN
countries for foreign funds "since we are using money from the
same source and attracting capital from the same source."

"That is why this drop in investment is something that
concerns us," Singh said, emphasizing the need to improve ASEAN's
competitive edge and putting the ASEAN Free Trade Area into place
as soon as possible.

Sharing Singh's concern over the capital crunch, Malaysia's
International Trade and Industry Minister Rafidah Aziz said the
ASEAN Investment Area plan could be harnessed to upgrade the
competitive edge of member countries.

"ASEAN needs to remain competitive in order to attract a much
larger portion of FDI funds," said Rafidah.

Under the proposal, there could be a free flow of intra-ASEAN
investments for the benefit of ASEAN as a group, she said.

Rafidah also said ASEAN countries which were losing their
lower labor cost competitiveness would need to improve their
technology base by attracting high-technology, value-added
investments.

These "labor-intensive" manufacturing industries could be
relocated to less developed ASEAN countries, she said.

An ASEAN secretariat economic report released in Singapore
earlier yesterday projected ASEAN's 1996 growth to be a shade
lower at 7.5 percent from 7.6 percent last year.

The forecast by the ASEAN put Thailand's growth at 8.6
percent, the highest in the group, and Brunei's at 2.5 percent,
the lowest.

The report prepared by the ASEAN secretariat tipped 7.1
percent growth for Indonesia, 8.2 percent for Malaysia, 6.5
percent for the Philippines and 7.0 percent for Singapore.

Vietnam, which only joined the group last year, was not
included in the forecast.

The six countries averaged GDP growth of 7.6 percent last
year. Only the Philippines will see its economy grow faster this
year by 6.5 percent compared to 5.2 percent in 1995, the report
said. Thailand's growth rate was projected to remain constant.

Inflation was forecast to drop across the board from an
average 5.4 percent last year to 4.8 percent this year with the
larger economies, which have a sizable rural base, being the big
beneficiaries.

"The good news is that inflation will drop in 1996 compared to
the previous year," Business Times cited the report as saying.
"The biggest gainers from a moderation of inflationary pressures
are expected to be Indonesia, the Philippines and Thailand."

The report forecast 3.4 percent inflation for Brunei, 7.3
percent for Indonesia, 4.4 percent for Malaysia, 6.5 percent for
the Philippines, 2.8 percent for Singapore and 4.4 percent for
Thailand.

The fall in inflation was attributed to an expected slowdown
in aggregate demand and a better agricultural performance.