ASEAN told to open up investments

ASEAN told to open up investments

KUALA LUMPUR (AFP): ASEAN expects to complete the implementation of a free trade plan by 2000, three years ahead of schedule, and should move on to create an open investment area in the region, an ASEAN official said Monday.

Association of Southeast Asian Nations (ASEAN) secretary- general Ajit Singh urged members to capitalize on the achievements of the ASEAN Free Trade Area (AFTA) and establish an ASEAN Investment Area (AIA) in order to be competitive.

"For ASEAN, AFTA plus AIA is the way to go. The synergies on both of them will ensure that ASEAN will remain as a highly attractive and globally competitive investment region," he told an ASEAN forum on foreign investment.

The AFTA plan calls for lowering tariffs on most goods traded within the region to a maximum five percent by 2003. ASEAN groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

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

But Ajit said that the tariff reduction schedules of the ASEAN member countries indicate that over 87 percent of total tariff lines will have tariff rates of no more than five percent by 2000.

"The products covered by these tariff lines account for 97 percent of intra-ASEAN trade," he added. Intra-ASEAN trade totaled US$132.5 billion in 1995.

Moreover, the average ASEAN tariff is expected to decrease from 7.1 percent in 1996 to 2.7 percent when AFTA is created, officials said.

Malaysian International Trade and Industry Minister Rafidah Aziz later told reporters that ASEAN had yet to set a time frame for the AIA as it wanted to first work on the strategies and scope of the investment program.

ASEAN does not want to be restrained by a time frame, she said, adding that the implementation should be flexible enough to consider the various levels of development and the sovereignty of national policies.

But she predicted the AIA would be set up "somewhere in the next decade or so."

Rafidah 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.

It would entail "greater private sector cooperation, freer flow of capital, skills and technology and where possible, national or preferential treatment for ASEAN investment," she said.

Foreign investment in ASEAN countries rose about 65 percent to $19.6 billion in 1995 from $11.9 billion in 1990, officials said.

Rafidah said Malaysia, which ranks among the five largest Asian recipients of foreign investment, expects to maintain its position through aggressive marketing and upgrading of domestic infrastructure and support facilities.

"Malaysia will continue to improve the investment climate through further deregulation and liberalization and provide national treatment for foreign investors," she said.

But Rafidah stressed that "Malaysia will continue to oppose any attempts by any party to propose rules and disciplines that directly encroach and impinge upon national policy objectives."