ASEAN plans 'bold steps' to woo foreign investment

ASEAN plans 'bold steps' to woo foreign investment

By Meidyatama Suryadiningrat

HANOI (JP): Ministers from the Association of Southeast Asian
Nations (ASEAN) agreed here on Saturday to take "bold measures",
such as offering tax holidays, to woo foreign investment to the
crisis-hit region by the end of next year.

Indonesia's Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasamita said ASEAN countries realized that
it was imperative to take "bold measures" to attract investment.

"Our biggest problem is to attract investment and regain
(investors') confidence," he told The Jakarta Post on the
sidelines of an ASEAN economic ministers meeting.

"That's why we've come up with several steps to attract
investors in the next two years," he added.

Ginandjar was among the 17 ASEAN foreign and economic
ministers holding concurrent meetings on Saturday in the
Vietnamese capital.

The two meetings were held in the run-up to the ASEAN Summit
which starts on Tuesday.

While the economic ministers seemed to come up with a crucial
breakthrough to help overcome the economic crisis which has
blighted the region since mid-1997, the foreign ministers in a
separate meeting could not make any headway on Cambodia's
membership in ASEAN.

Coming out of a pre-meeting dinner late on Thursday evening
Indonesian foreign minister Ali Alatas said no consensus could be
reached and that the ministers agreed to refer the question to
the leaders.

Cambodia, Laos and Myanmar were set to join ASEAN -- which
groups Brunei, Indonesia, Malaysia, the Philippines, Singapore,
Thailand and Vietnam -- in June 1997.

However, political turmoil which saw Hun Sen oust his co-Prime
Minister Norodhom Ranariddh, prompted ASEAN to accept Laos and
Myanmar and postpone Cambodia'a admission.

But last week's formation of a new government in Phnom Penh
gave new hope that Cambodia would be accepted by the end of the
year.

During their meeting, the foreign ministers only touched on
the subject, which will be included in the ministers' report to
the leaders.

An Indonesian delegate said that there were no fewer than 11
paragraphs on the Cambodia issue in the report.

Alatas on Saturday said it was quite possible for the leaders
to come up with a consensus when they meet, while his Thai
counterpart Surin Pitsuwan said it was really now all up to the
heads of government.

But Pitsuwan was also hesitant when asked to predict the
outcome: "Its difficult to say."

Sunday's arrival of Prime Minister Hun Sen to lobby for
Cambodia's admission could be a telling factor, as it was evident
that ASEAN foreign ministers were deeply divided on the issue
with Singapore, the Philippines and Thailand strongly urging
deferral of the admission.

An Indonesian foreign ministry official said that a consensus
would be "tough", noting recent public statements by Singapore
Prime Minister Goh Chok Tong and Philippine President Joseph
Estrada against Cambodia's immediate admission.

Apart from the Cambodian question, the foreign ministers had a
brisk meeting as they went through the non-economic portions of
the Hanoi Declaration and Hanoi Plan of Action which will be
signed by the leaders.

Investment

Noting the need for urgent concrete measures, the ASEAN
economic ministers decided in their meeting, held in an adjacent
room to the foreign ministers' gathering at the Hanoi Daewoo
Hotel, on what they described as "bold measures" which would
provide various incentives for foreign investment and intra-ASEAN
trade.

When asked, Ginandjar acknowledged that these bold steps would
include tax holidays for foreign investment.

He refused to divulge details saying that they would be
revealed after the leaders met.

An ASEAN official attending the summit disclosed to the Post
that ASEAN states would at least commit to one of several
investment incentives.

Among them are a three-year tax exemption on corporate income
tax, a 30 percent reduction on individual income tax or an
allowance of 100 percent share ownership.

Other incentives being looked at are reductions in import tax
for machinery, and land ownership of up to 30 years.

Stressing the immediacy of the situation, the official said
the exemptions would only apply to investors submitting a
proposal to investment boards of respective ASEAN states between
Jan. 1, 1999 and Dec. 31, 2000.

However it remained unclear whether these incentives would
only apply to the manufacturing industry or include other
sectors.

It was also uncertain whether these "bold measures" would be
pronounced as a separate document or included in the two to be
adopted by the ASEAN leaders.

On the intra-ASEAN front, Ginandjar said ministers were
looking to accelerate the deadline of the ASEAN Investment Area
from 2010 to 2003.

This means that member states investing in each other's
country would be given national treatment.

He also said that Indonesia's proposal to enhance the use of
ASEAN currencies in trading along with counter-trade had been
accepted.

There was also a proposal to further speed up the reduction of
tariff lines to a year-by-year basis prior to the ASEAN Free
Trade Area deadline of 2003.

According to Ginandjar there was a general acceptance of this.
However, a final consensus was pending the arrival of Malaysia's
Minister of Industry and Trade Rafidah Aziz who had been detained
in Kuala Lumpur for a domestic meeting.

Both ASEAN foreign and economic ministers will meet for a
joint meeting on Sunday to combine the results of their
respective talks to present to the leaders.