Open
Regionalism and Deeper Integration: The Implementation of ASEAN Investment
Area (AIA) and ASEAN Free Trade Area (AFTA)
Dr.
Lawan Thanadsillapakul
Part
8
The
Sixth ASEAN Summit agreed to launch "Bold Measures" for speedy
recovery from the crisis(59) . These include the "Short Term Measures to enhance ASEAN Investment
Climate" that accelerates the implementation of AIA(60) . The short term practical measures cover the following areas(61) : minimum three years corporate income tax exemption or a minimum 30%
corporate investment tax allowance; 100% foreign equity ownership; duty-free
imports of capital goods; domestic market access; minimum industrial and
leasehold period of 30 years; employment of foreign personnel; and speedy
customs clearance. All these measures are applicable to all investors(62) .
The
specific measures and privileges extended by ASEAN member countries provided
in section 3 of the Short Term Measures are as follows:
|
Brunei
will allow 100% foreign equity ownership in high-technology manufacturing
and export-oriented industries. |
|
Indonesia
offers wholesale and retail trade up to 100% foreign equity ownership
to qualified investors, in addition to 100% foreign equity in all
areas of the manufacturing sector. Indonesia has also reduced the
processing time for approval in principle, for investment less than
US$ 100 million, to 10 working days. In the banking sector, listed
banks are open for 100% foreign equity ownership; |
|
Laos
allows duty exemption on imported capital goods required by the
promoted investment projects; |
|
Malaysia
offers 100% foreign equity ownership in the manufacturing sector
with no export conditions imposed on all new investments, expansions
and diversifications, except for seven specific activities and products.
Foreigners can also own land in Malaysia subject to certain limitations; |
|
Myanmar
will extend a minimum of three years corporate tax exemption to
all investment projects in all sectors. In addition, they will also
extend the duty free import of raw materials to all industrial investments
for the first three years of operation; |
|
The
Philippines will open retail trade and distribution business to
foreign equity. In addition, the Philippines has opened private
construction in the domestic market to foreign companies; |
|
Singapore
has substantially reduced business costs as part of a cost reduction
package that amounts to S$ 10 billion in saving in addition to extending
30% corporate investment tax allowance on a liberal basis to industrial
projects and to selected service industries in respect of productive
equipment. These activities include manufacturing, engineering or
technical services and computer-related services; |
|
Thailand
allows 100% foreign equity ownership for manufacturing projects
regardless of location. Furthermore, agricultural projects, which
export 80% of sales, will receive import duty exemption on machinery,
regardless of location; |
|
Vietnam
extends duty exemption on imported capital goods for all projects
in respect of the import of raw materials for production for especially
encouraged investments and for projects located in mountainous or
remote regions for the first 5 years of operation. The issuance
of investment licenses for several types of projects has been reduced
to 15 days from the receipt of proper simplified documents. In addition,
investment licensing for projects under US$ 5 million has been decentralised
to all provinces and cities. |
However,
all privileges granted by ASEAN countries are subject to specific conditions:
investors must meet the minimum investment level specified by the host
country, if any; the industry must be in the published priority list for
tax incentives to enjoy this particular privilege; the industry must not
be in any negative list, if any; and the investor must show proof that
foreign funds have been brought in for the entire amount of the investment,
if required by the host country(63) .
Part
9
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(59)
Statement on Bold Measures paragraph 1. provided that "1. The financial
and economic crisis has severely affected the ASEAN economies and business
dynamism in the region. In order to regain business confidence, enhance
economic recovery and promote growth, the ASEAN Leaders are committed
to the realization of the ASEAN Free Trade Area (AFTA). In addition, the
Leaders agreed on special incentives and privileges to attract foreign
direct investment into the region. To enhance further economic integration
of the region, the Leaders also agreed to further liberalize trade in
services". The special incentives and privileges are provided in
the "Short Term Measures to enhance ASEAN Investment Climate".
(60)
These "short-term measures" are applicable to all applications
received from 1st January 1999 to 31st December 2000, and those approved
thereafter. Each ASEAN country has agreed to extend additional special
privileges to qualified ASEAN and non-ASEAN investors in the manufacturing
sector. The "Short Term Measures" were agreed as part of "the
ASEAN Investment Bold Measures" agreed upon by the ASEAN Leaders
at the Sixth ASEAN Summit in Hanoi on 16th December 1998.
(61)
Section 1: Privilege Granted to new Investments/Projects or Expansion
of Existing Investment Operations of the "Short-term Measures to
Enhance ASEAN Investment Climate", Annex to the Statement on Bold
Measures, agreed upon by the ASEAN Leaders at the Sixth ASEAN Summit in
Hanoi, in December 1998.
(62)
Joint Press Statement, First Meeting of the ASEAN Investment Area (AIA)
Council, 5th March 1999, Phuket, Thailand. The statement declared that
"all ASEAN countries are implementing the "bold measures"
agreed upon by the ASEAN Leaders at the Sixth ASEAN Summit in Hanoi in
December 1998. The privileges cover manufacturing investment applications
received and approved by the respective ASEAN investment agencies in 1999
and 2000. The privileges under the "bold measures" are to be
extended to all investors, ASEAN and non-ASEAN. The Council encouraged
investors to take full advantage of the investment privileges offered
under the bold measures during the promotion period.
(63)
Section 4: "Conditions" of the Short Term Measures to Enhance
ASEAN Investment Climate. |