ASEAN offers 'bold' investment incentives
By Meidyatama Suryadiningrat
HANOI (JP): The Association of Southeast Asian Nations (ASEAN) agreed on Wednesday to introduce special incentives as a quick fix to the fall in investment to the region.
Incentives and privileges to attract foreign direct investment were outlined in a Statement of Bold Measures at the end of the sixth ASEAN Summit here.
"The adoption of the bold measures shows our strong determination to regain business confidence, enhance economic recovery and promote growth," said Brunei's Sultan Hassanal Bolkiah, who will chair the next ASEAN Summit in 2001.
"All of these will bring new momentum to the region's growth and development."
Regional statistics here show inflow of foreign direct investment into ASEAN fell by nearly 40 percent from US$31.4 billion in 1996 to $19 billion in 1997.
Officials believe foreign investment will help boost the crisis-hit economies.
Apart from accelerating the ASEAN Free Trade Area deadline from 2003 to 2002, the measures set out a crash program to entice investors if they submit investment applications for the manufacturing sector between Jan. 1, 1999, and Dec. 31, 2000.
Incentives open to qualified ASEAN and non-ASEAN investors may include a 100 percent foreign equity ownership, a three-year corporate income tax exemption or a minimum 30 percent corporate investment tax allowance. Exemptions will not be granted on an incremental basis over and above existing incentive provisions.
Investors could also receive duty-free imports of capital goods and a land leasehold of a minimum of 30 years. Foreign investors will also be given free market access to the domestic market.
Fellow ASEAN investors under the ASEAN Investment Area agreement may also qualify for national treatment in the manufacturing sector.
However, each country's incentives differ.
Indonesia, for example, has promised qualified investors in wholesale and retail trade up to 100 percent foreign equity, in addition to the 100 percent foreign equity in all areas of the manufacturing sector.
Listed banks are also open to 100 percent foreign equity ownership.
Indonesia will also speed up investment approvals to less than 10 working days for investments below $100 million.
Malaysia is offering 100 percent foreign equity ownership in the manufacturing sector, with no export conditions imposed on all new investment, expansion and diversification.
With limited exceptions, foreigners can also own land in Malaysia.
Thailand is allowing 100 percent foreign equity ownership for manufacturing projects regardless of their location, while agricultural projects which export 80 percent of sales will receive import duty exemption on machinery.
The Philippines has pledged to further open its retail trade and distribution business to foreign equity, and allow foreign companies into private construction.
Officials separately noted that despite the positive trend, particular national restrictions or conditions would continue to override.
Brunei, for example, will only allow full foreign equity ownership in high-tech manufacturing and export-oriented products.
Indonesia would require some local equity ownership after 15 years.
Agreements
Separately, ASEAN economic ministers also signed three documents -- Framework Agreement on Mutual Recognition, Framework Agreement on the Facilitation of Goods and Services and the Protocol to Implement the Second Package of Commitments under the ASEAN Framework Agreement on Services -- to hasten the grouping's economic integration.
The first agreement calls on member states to develop ways of establishing product standards, thus making the flow of goods from one member to another more acceptable.
The second agreement aims to facilitate speedy movement of goods from one ASEAN country to another, or to a third country, by way of a neighboring ASEAN country.
The arrangement is particularly important for food and agricultural products, which would spoil in lengthy transit.
Meanwhile the signed Protocol would make it easier for nationals of ASEAN members to sell their services to one another.
Economic ministers attending the proceedings in the Vietnamese capital were Brunei's Abdul Rahman Taib, Indonesia's Ginandjar Kartasasmita, Laos' Soulivong Daravong, Malaysia's Rafidah Aziz, Myanmar's David O. Abel, the Philippines' Jose Trinidad Pardo, Singapore's Lee Yock Suan, Thailand's Supachai Panitchpakdi and Vietnam's Truong Dinh Tuyen.