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ECONOMIC COOPERATION



The economic situation in ASEAN has improved and stabilized since the advent of the financial crisis in the middle of 1997. Nineteen ninety-eight was a difficult year for the region but the economic prospects for 1999 are expected to be better. Economies in the region have registered signs of having bottomed out but the pace of recovery would depend on the reforms being undertaken by the individual countries and the on the developments in ASEAN's major economic partners. The IMF forecasted that the region would register -1% in contraction in growth for 1999 as compared to -8.4% in 1998.

Positive indicators include (a) return of stability in the foreign exchange markets; (b) rising current account surpluses and a build-up of reserves; (c) substantial decline in domestic interest rates; (d) easing of inflationary pressures; (e) recovery in stock markets; (f) improvement in consumer sentiment; and (g) leveling off in the contraction of industrial production.

The policies adopted by the ASEAN Member Countries to address the financial situation in the region were aimed at reviving domestic demand and economic activity, easing monetary and fiscal policies, and increasing fiscal spending to mitigate the adverse impact of the crisis on the poor and vulnerable segments of the societies.

While there are signs that the economies in the region are turning around, there are a number of downside risks that could affect the pace of recovery in the region. These risks include rising protectionism, weakness in the Japanese economy, exchange rate misalignment of major currencies, uncertainty of external financial flows, and the possibility of a sharp reversal in the US stock market.


I. FINANCE

ASEAN finance cooperation has been further strengthened with the establishment of the ASEAN Surveillance Process (ASP). The ASEAN Member Countries have also reached a consensus in presenting a common ASEAN position in reforming the international financial architecture. Consultations with China, Japan and the Republic of Korea were held to exchange views on monitoring short-term capital flows and international financial reforms. Finance cooperation with Japan has also been enhanced with the establishment of the forum of ASEAN-Japan Finance and Central Bank Deputies Meeting, which met three times over the past year.

ASEAN finance cooperation has intensified under the direction of the ASEAN Finance Ministers supported by the ASEAN Senior Finance Officials Meeting (ASFOM) and the ASEAN Select Committee for the ASEAN Surveillance Process. The Working Group of ASFOM met four times during the year and the Working Group of the ASEAN Select Committee met on 14 March 1999 in Hanoi. The ASEAN Insurance Regulators met on 28-29 October 1998 and agreed to formalize their forum.


ASEAN Surveillance Process

The ASEAN Surveillance Process (ASP) was formally established at the Special Meeting of the ASEAN Finance Ministers on 4 October 1998. The ASP is intended to prevent future crises through the conduct of early warning system and regional economic surveillance exercise. The ASP involves a peer review process and the exchange of views and information among the ASEAN Finance Ministers on macroeconomic and finance matters.

Institutionally, the ASP is supported by the forum of ASEAN Finance and Central Bank Deputies and its working group. It is assisted by the ASEAN Surveillance Coordinating Unit (ASCU) based at the ASEAN Secretariat and the ASEAN Surveillance Technical Support Unit (ASTSU) based at the Asian Development Bank in Manila. After two years, all the activities of the ASTSU will be transferred to ASCU in Jakarta. The first ministerial peer review process was conducted on 19 March 1999 in Hanoi.


Common ASEAN position on the reform of
the international financial architecture

  1. The global effort to resolve the current crisis must recognize the diverse circumstances and priorities of individual economies at different stages of development. Any proposed solution must therefore be sufficiently flexible to accommodate these differences.

  2. In view of the global nature of today's financial markets, the reform of the international financial architecture must involve the participation of all countries, including the emerging economies.

  3. ASEAN shall adopt a more proactive role at various international and regional fora to ensure that its interests and priorities are given due consideration in any proposal reform the international financial architecture.

  4. While the purpose of any international reform is to enhance efficiency and stability in financial markets and to promote global economic activity, such efforts must not lose sight of the overriding objective of improving living standards. Due priority must, therefore, be accorded to measures to protect the poor and most vulnerable segments of society.

  5. Measures to strengthen the international financial architecture would need to include a review of the roles of the international financial institutions (IFIs), as well as the international regulatory bodies, in order to enhance their capacity and capability to contain and resolve crises.

  6. Appropriate mechanisms are needed to enhance greater private sector participation in crisis management and resolution.

  7. Standards of transparency and disclosure must be applied equally to the public and private sectors. In particular, large market participants, such as highly leveraged institutions which have systemic significance, should be subject to regular and timely transparency and disclosure requirements.

  8. The dissemination of necessary information will help investors to make better decisions and not rely solely on the information of rating agencies. Given the important role that credit rating agencies play in the international financial markets, there should be greater transparency in the rating process.

  9. There must be closer and more coordinated monitoring of short-term capital flows. In particular, there should be global agreement on the disclosure requirements for such flows and closer collaboration and information sharing among national and international regulators.

  10. To complement the ASEAN Surveillance Process, ASEAN shall explore options to strengthen regional support activities.

  11. An orderly and well-sequenced approach to capital account liberalization in tandem with the degree of development of the domestic financial sector and supervisory regime should be supported.

  12. Sound, consistent and credible macroeconomic policies are fundamental to the sustainability of any exchange rate regime. There is no single exchange rate regime that is suitable for all countries and that countries have a right to choose their own exchange rate regime based on their national objectives and priorities.

    (Adopted at the Special ASEAN Finance Ministers' Meeting in Manila on 30 April 1999)


 


ASEAN Currencies

As part of the effort to encourage greater use of ASEAN currencies for trade settlement, a bilateral payment arrangement (BPA) between Malaysia and the Philippines was concluded. Two other BPAs, between Malaysia and Thailand and between Malaysia and Indonesia, are at different stages of discussion. The BPAs would involve netting the amount of the trade transactions conducted between the two countries. The balance could be settled with the currency of one of the two countries.


Insurance

The ASEAN Insurance Regulators met for the first time on 28-29 October 1998 in Brunei Darussalam. The ASEAN Insurance Commissioners Meeting had been abolished in 1993. The areas of insurance cooperation include: (a) harmonization of insurance laws; (b) exchanging information on insurance development and on insurance statistics; (c) insurance education and training for the staff of insurance supervisory authorities; (d) enhancement of the role of ASEAN Re Corporation Limited to further regional cooperation in reinsurance business; and (e) development of a strategic plan of action to guide future work.


External Finance Cooperation

The ASEAN Finance Ministers have maintained close consultations with various international financial institutions (IFIs). In a meeting with the International Monetary Fund, the World Bank and the Asian Development Bank on 20 March 1999 in Hanoi, ASEAN identified the following areas for cooperation with the IFIs: (a) strengthening institutional capacity, (b) restructuring financial and corporate sector, and (c) providing social safety nets.

A Meeting of the Finance and Central Bank Deputies of ASEAN Member Countries, Japan, China and Republic of Korea (ROK) was held on 18 March 1999 in Hanoi. The Meeting exchanged views on ways to monitor short-term capital flows and the reform of the international financial architecture. The ASEAN-Japan Finance and Central Bank Deputies Meeting was held three times since its inception on 6 July 1998 in Yangon. The third meeting, which was held 18 March 1999 in Hanoi, discussed economic and financial developments in ASEAN and Japan as well as technical assistance from Japan to ASEAN (Miyazawa Fund).


II. TRADE

The Sixth ASEAN Summit decided to accelerate the realization of AFTA by one year, from the year 2003 to the year 2002. This decision was made in the midst of the worst economic downturn since the post-war era and underscored ASEAN's commitment to continue regional economic liberalization and integration. To complement the process of accelerating trade liberalization, intra-ASEAN trade facilitation measures have been adopted. These include the signing of the Framework Agreement on the Facilitation of Goods in Transit and the Framework Agreement on Mutual Recognition Arrangements (MRA) during the Sixth ASEAN Summit in December 1998.


Further Acceleration of AFTA

In order to sustain business and investor confidence, the ASEAN Leaders agreed in December 1998 to further accelerate the implementation of the ASEAN Free Trade Area. The six original members (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) will advance the implementation of AFTA by one year from the year 2003 to 2002. The acceleration will be accomplished in stages. Individually, each country will commit to achieve a minimum of 85% of the Inclusion List with tariffs of 0-5% by the year 2000. Thereafter, this will be increased to a minimum of 90% of the Inclusion List in the 0-5% tariff range by the year 2001. By 2002, all of items in the Inclusion list will have tariffs of 0-5% with some flexibility.

Member Countries also agreed to deepen, as soon as possible, tariff reduction to 0% and accelerate the transfer of products which are currently not included in the tariff reduction scheme into the Inclusion List. The newer members of ASEAN shall, and expand the number of tariff lines in the 0% category by 2006 for Vietnam and 2008 for maximize their tariff lines, between 0-5% by 2003 for Vietnam and 2005 for Laos and Myanmar Laos and Myanmar.


CEPT Product List and Average Tariff Rates

Indonesia, Malaysia, the Philippines and Thailand issued their 1999 legal enactments before the end of the first quarter of 1999. Based on these legal issuances, as well as earlier ones by other Members, the CEPT package for 1999 appears in Table 1. In addition, some Members transferred items from the Temporary Exclusion List or General Exception List or Sensitive List into the Inclusion List and Temporary Exclusion List. As a consequence, almost 85 % of all products are already in the Inclusion List. For the original six Member Countries, the percentage of the Inclusion List in their total product list is about 96.6 percent.

The average regional CEPT rate for products in the Inclusion List has fallen to 4.59% from 12.76% in 1993 (see Table 2). As of 1998, no product in the Inclusion List of the first six ASEAN Member Countries has CEPT tariff rate higher than 20%. The average CEPT rate for the region is scheduled to fall to 3.74% by the year 2000 and then to 2.63% by the year 2003.


Strengthening the Rules and Disciplines of the CEPT Agreement

The rules and disciplines of the CEPT Agreement continued to be strengthened with the signing of the Protocol on Notification Procedures in October 1998 and the amendment of Article 6 on Emergency Measures of the CEPT Agreement. The Protocol on Notification Procedures obliges Member Countries to provide early notification of actions or measures that may nullify existing benefits enjoyed by other Members.

(Table 1 - 1999 CEPT Package)

(Table 2 - Average CEPT Tariff Rates by Country)


The Protocol on Notification Procedures assumes that ASEAN Members have a fundamental obligation to notify measures that may result affecting concessions or benefits enjoyed by other Members. The notification obligation applies not only to the CEPT Agreement but also to all other ASEAN economic agreements. ASEAN Members must provide notification in advance, at least 60 days before an action or measure is to take effect. A Member State must also provide adequate opportunity for prior discussions with those Member States with an interest in the action or measure concerned. The notification of a particular measure or action shall not preclude any other Member Country from requesting for consultation or invoking the dispute settlement mechanism. However, prior notification does not apply to actions taken for emergency or safeguard measures specified in Article 6 of the CEPT Agreement.

While emergency actions are exempted from the advance notification requirement, ASEAN agreed on the need to strengthen Article 6 of the Agreement by requiring compliance with relevant provisions of the WTO Agreement on Safeguards. In particular, compliance with Article 3 (Investigation), Article 4 (Determination of Serious Injury or Threat Thereof), Article 5 (Application of Safeguard Measures), Article 6 (Provisional Safeguard Measures), Article 7 (Duration and Review of Safeguard Measures) and Article 8 (Level of Concessions and Other Obligations) are now mandated in cases where emergency action is to be sought. This was done by amending the Interpretative Notes of Article 6 of the CEPT Agreement.


Trade value and Direction of trade

ASEAN exports to the rest of the world declined from US$ 126.5 billion in the first half of 1997 to US$ 122.2 billion in the first half of 1998 or by 3.6% (see Table 3). The biggest decline was with ASEAN's Dialogue Partners. Exports to the rest of East Asia fell significantly, reflecting the major contractions in the economies of this part of the world. Exports to Hong Kong, Japan and ROK declined by 10.7%, 17.4% and 23.3% respectively. ASEAN also suffered declines in its exports to the United States (-6.8%) and the European Union (-0.9%).

However, ASEAN imports fell even further, from US$ 148.5 billion in the first half of 1997 to US$ 109.6 billion in the first half of 1998 or a decline of nearly 26.1%. Imports from major trading partners fell across the board. Major declines occurred in imports from the EU (US$ 9.1 billion) and Japan (US$ 11.3 billion).

As a consequence, ASEAN turned a major trade deficit of US$ 26.3 billion in the first half of 1997 to a huge US$ 16.9 billion surplus in the same period in 1998. Major turnarounds were experienced with the EU, Japan and the U.S. Large surpluses were recorded with the EU (US$ 4.4 billion), the U.S. (US$ 2.3 billion) and Hong Kong (US$ 5.9 billion). ASEAN continued to run a huge deficit with Japan, but this was markedly lower than in the previous period.

The export slowdown was felt even more strongly in intra-ASEAN trade. As a result of the economic weakness in the region, intra-ASEAN trade fell from US$ 44.7 billion in the first half of 1997 to only US$ 32.8 billion in the first half of 1998 or by nearly 26.7%. The biggest downturn was experienced by Thailand, Malaysia and Singapore. However, Indonesia bucked the trend with a strong export performance during the period.

(Table 3 - Extra-ASEAN Trade for First Half of 1997 and 1998 (US Millions) )

(Table 4 - Intra-ASEAN Exports of Some ASEAN Member Countries : Jan-June 1997 and Jan-June 1998 (US $ Million) )


Facilitation of Goods in Transit

A Framework Agreement on the Facilitation of Goods in Transit was signed at the Sixth ASEAN Summit in Hanoi. The Framework Agreement grants the following rights to Member Countries: (a) right of transit transport for goods and vehicles across the territory of one or more member countries from point of origin to final destination, including the right to load and discharge goods destined for or coming from third countries; (b) transit transport not to be subject to any unnecessary delays or restrictions and shall be exempt from customs duties, taxes and other charges; and (c) goods carried in sealed road vehicles, combination of vehicles or container not to be subject to examination at customs offices en route.

These measures imply that goods may be moved by road or rail across two or more countries within ASEAN to reach a final destination, without regulatory obstacles like customs checks, transport regulations for drivers and vehicle specifications. These are also expected to facilitate intra-regional trade and enhance cost efficiency.

To operationalize the Framework Agreement on the Facilitation of Goods in Transit by the year 2000, nine implementing Protocols shall be finalized and concluded by December 1999. In addition, a separate ASEAN Framework Agreement on the Facilitation of Inter-State Transport, designed to complement transit transport, will be formulated and concluded by the year 2000.


Customs Cooperation

The ASEAN Customs Policy Implementation and Work Programme (PIWP) has been finalized. PIWP is a collection of action plans covering fifteen customs elements that will be collectively developed. The PIWP is intended to realize the ASEAN Customs Vision 2020, issued in 1997.

The ASEAN Customs Vision 2020 aims to develop an ASEAN Customs Partnership for World Class Standards and Excellence in efficiency, professionalism and service, and uniformity through harmonized procedures, to promote trade and investment and to protect the health and well-being of the ASEAN community.

The successful implementation of the PIWP will bring important benefits to members of the public and the business community: (a) a common goods nomenclature for the uniform classification of goods traded in the region; (b) a more transparent, consistent and harmonized approach to customs valuation, through the implementation of the WTO Valuation Code; (c) a more transparent, predictable and rapid clearance of goods at Customs borders; (d) simplification and harmonization of customs procedures and requirements to facilitate the movement of goods in transit; (e) clearer service level targets for customs clearance; (f) a more transparent and simplified approach to handling temporarily admitted goods; and (g) a more modern customs service overall.

Table 5
Summary of Goals for the Customs Policy Implementation and Work Programme

Post Clearance Audit

  • Development of an ASEAN guidelines on customs audit
  • Implementation of customs post clearance audit in each member country

Cargo Processing

  • To simplify existing cargo clearance procedures and reduce documentary requirements to the barest essentials necessary for effective customs enforcement
  • To integrate international best practices into the overall standard operating procedures in the cargo clearance systems

Customs Valuation

  • To harmonize customs valuation methods in ASEAN Member Countries through adoption and operation of the WTO Valuation Agreement.

Tariff Classification

  • To promote transparency, consistency and uniformity in the classification of goods within ASEAN Member Countries through the implementation of an ASEAN Harmonized Tariff Nomenclature (AHTN).
  • To facilitate trade though consistent, predictable and assured classification rulings and decisions.

Goods in Transit

  • To facilitate the movement of goods in transit within and through ASEAN Member Countries by the introduction of simplified and harmonized customs procedures and requirements.

Automation

  • To encourage the use of automation for customs cargo processing within ASEAN countries with the objective of improving clearance times and increasing the level of efficiency and effectiveness.
  • To coordinate the development of national automated systems so as to ensure compatibility in data requirements for possible future linkage within the region.

Enforcement

  • To improve customs enforcement throughout the region by using risk management techniques together with the latest technical developments and equipment.

Temporarily Admitted Goods

  • To simplify and harmonize the customs control of goods under temporary admission in ASEAN Member Countries through simplified and harmonized customs procedures and requirements.

Strategic Planning and Management

  • To encourage the development of strategic plans so as to provide the basis of a unified regional approach to the management and direction of customs activity.

Mutual Assistance

  • To establish a cooperative framework at the regional level for ensuring the effective and prompt exchange of information, in particular, for the prevention, investigation and repression of smuggling, trafficking of narcotics and psychotropic substances, and other customs offences.

Transparency Enhancement

  • To ensure that current methods of information dissemination are enhanced and broadened on a regional basis.

Training and Human Resource Development

  • To develop the human resource of ASEAN member administrations through training programmes, study visits, attachments, courses and seminars so as to successfully implement the first five year cycle of Vision 2020.

Technical Assistance to New Members of ASEAN

  • To provide technical assistance to the customs administrations of Cambodia, Laos, Myanmar and Vietnam where particular needs have been identified.

International Customs Fora

  • To promote awareness, understanding and adoption of international conventions, standards, recommendations, guidelines and best practices relating to customs matters among ASEAN member countries.
  • To create a coherent unified approach by ASEAN Member Countries in relevant international fora.

Partnership with the Business Community

  • To strengthen and improve existing relationships and institutions of customs with the business community.
  • To lay initial foundation for the realization of the overall objectives of the Plan of Action on the Business Community to be achieved by the year 2020.

Standards and Conformity Assessment

Substantive progress was made in 1998 on the elimination of technical barriers to trade by the ASEAN Consultative Committee for Standards and Quality (ACCSQ) and other Working Groups under the Senior Officials Meeting on Agriculture and Forestry.

The ASEAN Framework Agreement on Mutual Recognition Arrangements (MRAs), which was signed on 16 December 1998 at the Sixth ASEAN Summit, provides a set of basic guiding principles for Member Countries to enter into sector-specific MRAs. Sectors such as cosmetics and pharmaceuticals were being considered for MRAs. A number of activities are now being undertaken by Member Countries to implement the Framework Agreement including drafting the Interpretative Notes of the Framework Agreement, identifying priority sectors for MRAs, organizing seminars for industries and other parties concerned to introduce the MRA concept, its benefits and its requirements, and building-up of mutual confidence in ASEAN testing laboratories.

From the 20 priority product groups for standards harmonization, Member Countries have identified products that are regulated in ASEAN (29 standards covering 10 products) and those with voluntary implementation of standards (23 standards covering 10 products). Member Countries agreed to harmonize these standards through alignment with international standards. Harmonization work is undertaken on the basis of the ISO/IEC Guide 21 and in line with the APEC's definition on alignment, which is to adopt international standards as national standards as far as possible. The exercise for regulated standards is scheduled for completion by the year 2000.

Member Countries are working towards greater information dissemination on standards and conformity assessment through the Internet. The ASEAN Homepage on Standards and Conformity Assessment was launched in August 1998 to provide updated information to industries. The Homepage is linked with homepages in 7 ASEAN Member Countries, namely Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Seven issues of the ASEAN Standards and Quality Bulletin were published to update industries on the progress in the elimination of TBTs and other ASEAN cooperative activities in standards and conformity assessment.

Member Countries also undertake cooperative activities with major trading partners, ASEAN-EU Regional Economic Cooperation Programme on Standards, Quality and Conformity Assessment on 31 December 19998. The programme is designed to enhance commercial exchanges between the two regional groupings by the adoption of compatible structures, standards and conformity assessment procedures. Apart from this, ASEAN is engaged in the Total Quality Management (TQM) programme with Japan and has an ongoing Joint Action Plan on standards and conformity assessment with Australia and New Zealand.


III. INVESTMENT


ASEAN Investment Area

ASEAN investment cooperation reached a significant milestone with the signing of the Framework Agreement on ASEAN Investment Area (AIA) on 7 October 1998, on the occasion of the 30th ASEAN Economic Ministers Meeting in Manila. It has now been ratified by all member countries. An ASEAN Investment Area Council, a ministerial body, was established to oversee the execution of the Framework Agreement.

AIA aims to promote the inflow of direct investment from ASEAN and non-ASEAN sources by making ASEAN a competitive, open and liberal investment area. Under the AIA, ASEAN shall (a) implement coordinated ASEAN investment cooperation and facilitation programmes; (b) implement coordinated promotion programmes and investment awareness activities; (c) open immediately all industries, with some exceptions as specified in the Temporary Exclusion List (TEL) and Sensitive List (SL), to ASEAN investors by 2010 and to all investors by 2020; (d) grant immediately national treatment, with some exceptions as specified in the TEL and SL, to ASEAN investors by 2010 and to all investors by 2020; (e) involve the private sector actively in the AIA development process; (f) promote freer flow of capital, skilled labour and professionals, and technology amongst the Member Countries; (g) provide transparency of investment polices, rules, procedures and administrative processes; and (h) develop a more streamlined and simplified investment process.

The Framework Agreement on AIA is expected to complement the 1987 ASEAN Agreement for the Promotion and Protection of Investments and its 1996 Protocol. The AIA will bind the Member Countries to gradually eliminate investment barriers, liberalize investment rules and policies, grant national treatment and open up industries, initially in the manufacturing sector and later to cover other sectors under the Agreement.

The TEL for the manufacturing sector will be phased out by 2003 for all Member Countries except for Laos and Vietnam, which will have to phase out their TEL by 2010. In the implementation of the Agreement and submission of the lists, all Member Countries have agreed to adhere to the following principles: (a) being forward looking and no back-tracking; (b) standstill; and (c) ASEAN MFN.

The AIA provides the following incentives to ASEAN investors: (a) greater investment access to industries and economic sectors as the result of AIA; (b) national treatment; (c) greater information on the investment climate and investment opportunities; (d) a more liberal and competitive investment regime; and (e) lower transaction costs.


Joint Investment Promotion Events

The ASEAN Member countries have collectively promoted ASEAN as an investment region. In particular, joint investment seminars and fairs were held on 16 June 1998 in Tokyo. The events were jointly organized by the ASEAN Secretariat and the ASEAN Promotion Centre and conducted by the ASEAN Heads of Investment Agencies. More joint investment promotion events are being planned.

To improve better understanding of the investment situation and opportunities in the region, ASEAN published the following materials: (a) ASEAN Supporting Industry Database; (b) Directory of ASEAN Technology Suppliers; (c) Compendium of Investment Rules and Policies in ASEAN; and (d) Handbook of Investment Agreements in ASEAN. These materials were launched by the ASEAN Heads of Government in December 1998 in Hanoi.


Comparable/Harmonised FDI Data Collection and Reporting

An ASEAN Task Force on FDI Statistics has been established to work on the comparable measurement, collection and reporting of FDI statistics in ASEAN. The comparable FDI statistics, which will cover both balance-of-payments and administrative data, will allow ASEAN to improve its monitoring of FDI flows and developments in the ASEAN Investment Area. The AIA Council at its First Meeting in March 1999 in Phuket requested the Task Force to bring out a minimum set of FDI data for presentation to the AIA Council Meeting in September 1999. A Seminar on the Collection and Reporting of FDI Statistics in the Context of the ASEAN Investment Area was convened on 13-14 July 1998 in Bangkok to develop a framework and work programme for establishing a harmonized FDI statistical system in the context of AIA.


Investment Bold Measures Open to All Investors

ASEAN has launched a set of common investment privileges to further enhance the competitiveness and attractiveness of the region for FDI. All ASEAN Member Countries are currently implementing the investment privileges contained in the Statement on Bold Measures, which was issued in December 1998 in Hanoi. The investment bold measures include a minimum 3 year corporate income tax exemption or a minimum 30% corporate investment tax allowance; 100% foreign equity ownership; duty-free imports of capital good; domestic market access; minimum industrial land leasehold period of 30 years; employment of foreign personnel; and speedy customs clearance.

The investment privileges are extended to all investors, ASEAN and non-ASEAN, within the promotion period, which applies to manufacturing investment applications received between 1 January 1999 and 31 December 2000 and approved thereafter by the ASEAN investment agencies.


IV. INDUSTRY


ASEAN Industrial Cooperation Scheme

The main thrust of industrial cooperation in ASEAN is focused on the ASEAN Industrial Cooperation (AICO) Scheme, which became operational on 1 November 1996.

To date, Member Countries have received 62 AICO applications, 28 of which have been approved.

Under the ASEAN Statement on Bold Measures and other decisions, for applications received between 1 January 1999 and 31 December 2000, the following conditions will apply: (i) automatic waiver of 30% equity requirement; (ii) AICO arrangement in the form of intra firm transaction is allowed; (iii) reduction of AICO processing time from 60 to 45 days, from 14 to 10 days for the issuance of the COE and from 60 to 45 days for internal administrative procedures to effect the AICO tariff rate; (iv) participating countries may grant conditional approval when national policy, domestic law or regulation requires that such condition be imposed; and (v) AICO Final Product as a final output of an AICO arrangement is desirable but not mandatory.

Manufacturing companies that belong to the same group of companies or are administered by the same principal can now apply to form intra-firm AICO arrangements among themselves to exchange products they specialize in.

Under the previous rules, an AICO arrangement must result in the production of at least one AICO Final Product, and the AICO Final Product must contain AICO Intermediate Product or Raw Materials sourced from the participating companies. The new ruling does not require this anymore. Under an intra-firm AICO arrangement, the exchange of AICO Final Products among the participating companies is deemed sufficient to satisfy the resource sharing, industrial complementation or industrial cooperation criterion of AICO.

Under the AICO intra-firm arrangement, companies from the same group or administered by the same principal and with existing manufacturing facilities in different locations in ASEAN can now use the AICO Scheme to rationalize their production units. They can assign specialized facilities to cater their entire regional and global requirements. For companies that do not have such networks in the region, the AICO Scheme provides an incentive to set up one.

With the view to promoting the AICO Scheme among ASEAN entrepreneurs in the new members of ASEAN, AICO workshops were held in Myanmar, Vietnam and Lao PDR on the following dates: AICO National Workshop in Yangon, Myanmar, 16 March 1999; AICO National Workshop in Ho Chi Minh City, Vietnam, 22 March 1999; and AICO National Workshop in Vientiane, Lao PDR, 5 April 1999.

The ASEAN Secretariat promoted the AICO Scheme to a wider audience through its participation in the Seminar on AICO held by the ASEAN Promotion Center in Tokyo on 30 March 1999.

Brochures on AICO have been reprinted to include the latest developments in the scheme and distributed to prospective AICO companies. Information has also been disseminated through the ASEANWEB.


ASEAN Industrial Joint Venture Scheme

The operationalization of the AICO Scheme on 1 November 1996 also marked the end of the Brand-to-Brand Complementation (BBC) and ASEAN Industrial Joint Venture (AIJV) Schemes. As of February 1998, all applications for these schemes have been approved and certificates of eligibility issued. Companies in the participating countries which produce the same products as existing AIJVs can apply for the same privilege under the AIJV post waiver period. To date, the ASEAN Secretariat has issued 5 AIJV post waiver certificates of eligibility.


AEM-MITI Economic and Industrial Cooperation Committee

At the ASEAN-Japan Summit held in Kuala Lumpur, Malaysia on 16 December 1997, the Leaders agreed to establish a new body within the existing AEM-MITI consultations by restructuring the Working Group on Economic Cooperation in Cambodia, Laos and Myanmar. The new body, which shall be co-chaired at the ministerial level, was subsequently named as the AEM-MITI Economic and Industrial Cooperation Committee (AMEICC).

The establishment of the AMEICC was made necessary by the expansion of the framework of cooperation beyond providing assistance to the new members of ASEAN. Apart from providing development cooperation assistance to the new Members, the terms of reference of AMEICC includes enhancing industrial cooperation in ASEAN and improving ASEAN competitiveness.

AMEICC held its first meeting in Bangkok on 23 November 1998, at which it agreed to focus its immediate work programme on assisting economic recovery in the region. Other areas stipulated in its terms of reference were to be included in its medium to long-term work programme.

The immediate work programme includes a study of the areas where ASEAN has lost its competitiveness and how these areas could regain their competitiveness; a study to identify the future prospects of major industries including demand trends, supply structure and technological process; and strengthening the centres of excellence in ASEAN to enable them to cope with the demand for more engineers, technical personnel and managers.


V. SERVICES

The past year saw the successful conclusion of the round of services negotiations mandated by the Fifth ASEAN Summit in 1995. At that Summit, the Leaders called for services negotiations among Member Countries to begin in 1996 and end in 1998 in seven priority services sectors: air transport, business services, construction, financial services, maritime transport, telecommunications and tourism. The objective of the negotiations was to arrive at GATS-plus commitments granting market access and national treatment to ASEAN service suppliers.

An initial package of GATS-plus commitments was completed as scheduled on 30 June 1998 and endorsed by the ASEAN Economic Ministers (AEM) during the 29th AEM held in Kuala Lumpur on 16 October 1997. The ASEAN Economic Ministers also signed a Protocol to Implement the Initial Package of Commitments during the Second Informal ASEAN Summit in Kuala Lumpur on 15 December 1997. Having been ratified by all Member Countries, the Protocol is now in force.

Subsequently, ASEAN Member Countries concluded a second package of commitments, which was approved by the 30th ASEAN Economic Ministers at their meeting in Makati City on 7 October 1998. To implement effectively the second package of commitments, the ASEAN Economic Ministers signed the "Protocol to Implement the Second Package of Commitment under the ASEAN Framework Agreement on Services" during the Sixth ASEAN Summit in Hanoi in December 1998. Together with the initial package of commitments, all ASEAN Member Countries, except Brunei and Malaysia, have made commitments in all the priority sectors identified by the Fifth ASEAN Summit.

To build on the initial and second package of services commitments, the Member Countries have agreed to initiate another round of negotiations on services covering all services sectors and modes of supply, beginning in 1999 and ending in 2001. To ensure that the negotiations result in the progressive liberalization of the services sectors, ASEAN will explore other approaches to liberalization apart from the request and offer approach employed during the past three years. To spur efforts to further liberalize services sectors, ASEAN also recognized the importance of strengthening cooperation and facilitation in services.

Several training workshops were held in Yangon, Vientiane and Phnom Penh to assist the new Members of ASEAN on the GATS and the AFAS implementation. The workshops were led by staff members of the World Trade Organization (WTO) and the ASEAN Secretariat and attended by those officials from the new Members who are directly involved in the negotiation process.


VI. ELECTRONIC COMMERCE

Given the rapid expansion of electronic commerce in the global economy, the ASEAN Economic Ministers mandated the undertaking of a study on the evolution of electronic commerce and how ASEAN could better take advantage of its benefits. With this objective, ASEAN established a Coordinating Committee on Electronic Commerce (CCEC) to determine the scope of electronic commerce, study the role of the private sector, and explore cooperative programmes with international institutions to advance the development of electronic commerce in ASEAN.

The CCEC has drawn up a work programme on electronic commerce with the following objectives: (a) create the policy and legislative environment to facilitate cross-border electronic commerce; (b) ensure the coordination and adoption of a framework and standards for cross-border electronic commerce, which is in line with international standards and practices; and (c) encourage technical cooperation and technology transfer among Member States in the development of electronic commerce infrastructure, applications and services.

The CCEC has drawn up the ASEAN Guiding Principles on Electronic Commerce. The Guiding Principles are non-binding but will serve as a framework for identifying and designing technical cooperation and capacity-building initiatives which will promote and facilitate intra-ASEAN trade and place ASEAN on a firmer footing to trade electronically with the rest of the world.

Other activities in the pipeline include a study on the potential of electronic commerce in ASEAN, a virtual resource center for Y2K, an ASEAN Regional Forum on Y2K Contingency Planning, an ASEAN Regional Forum on Electronic Commerce and a Directory of ASEAN service providers and companies operating in electronic commerce.


VII. TRANSPORT AND COMMUNICATIONS

Transport Cooperation

The year under review saw the successful completion of the implementation of the ASEAN Plan of Action in Transport (1996-1998) with 26 projects and activities having been substantially carried out. The National and Regional Workshops on the Role of Transport and Communications in the ASEAN Region in the 21st Century project will develop the Successor Plan of Action 1999-2004, taking into account the transport action agenda of the Hanoi Plan of Action and the Conceptual Planning Framework adopted by the 5th Senior Transport Officials Meeting (STOM) in Singapore in March 1998. This successor plan is expected to be in place by July 1999.

ASEAN cooperation in the transport sector continued through the following modalities: (a) policy coordination and development; (b) liberalization initiatives in the areas of multimodal transport operations, facilitation of goods in transit and competitive air services; (c) infrastructure development involving highways and rail link projects; (d) harmonization and standardization activities as exemplified by the road transport and highway experts' work programs; and (e) technical networking and exchange of information cutting across all STOM working/experts' groups.

The Fourth Meeting of the ASEAN Transport Ministers in Singapore in September 1998 adopted two new ASEAN agreements. The Ministers concluded the "Agreement on the Recognition of Commercial Vehicle Inspection Certificates of Goods Vehicles and Public Service Vehicles Issued by ASEAN Member Countries". They endorsed the "ASEAN Framework Agreement on the Facilitation of Goods in Transit," which was subsequently signed by the ASEAN Economic Ministers in December 1998. These agreements represent major milestones in facilitating and enhancing trade and the free flow of goods, and thereby contribute to the ASEAN economic integration.

Furthermore, the Fourth Meeting of the ASEAN Transport Ministers (ATM) agreed on various proposals to enhance ASEAN cooperation in transport that can form part of the successor plan. These included setting up a task force to address, on an urgent basis, the Y2K problem in Air Traffic Control (ATC) and airport systems; liberalization of air freight services in ASEAN; strengthening cooperation amongst ASEAN ports; emphasis on sustainable urban transport and road safety; and the formation of an ASEAN cruise working group.

ASEAN convened the first meeting of the ASEAN Y2K Task Force on Air Safety and Efficiency in October 1998 at the Singapore Aviation Academy. Member countries reiterated that resolving the Y2K problem in Air Traffic Control and airport systems on an urgent basis shall be a top priority, in order to ensure air safety and efficiency in the ASEAN region. The recommendations of the Task Force are: (a) implement a mechanism for sharing of information and experience on national Y2K efforts and programs; (b) closer cooperation in contingency planning, through development/ harmonization of national contingency plans; and (c) implement an action plan to cover Y2K compliance monitoring and readiness every three months and developing regional back-up plans for voice and data communications between ATC systems.

The second meeting of the Task Force was held in April 1999 at the Singapore Aviation Academy. The second meeting was timely as it was critical to completing the work of the Task Force, in particular to finalizing the ASEAN Y2K Contingency Plan for both operational and equipment aspects in line with ICAO's Y2K Contingency Plan for the Asia-Pacific region. The Task Force agreed on a number of actions: (a) adopt the contingency routes for major international traffic flows in accordance to ICAO's Y2K Contingency Plan; (b) finalise Supplementary Letters of Agreement (SLOA) between ASEAN states for Air Traffic Control coordination procedures and arrangements between states with adjacent Flight Information Regions to address contingency situations; (c) formulate a list of back-up facilities to be used in the event of communications failure; and (d) use INMARSAT as the primary means of Satellite phone communications for ASEAN in order to ensure compatibility of back-up facilities. A Report of the Task Force will be submitted to the Fifth ASEAN Transport Ministers' Meeting.

The ASEAN National Tourism Organizations (ASEAN NTOs) have agreed to the formation of a Joint ASEAN NTOs - STOM Cruise Working Group. The work of the Joint Cruise Working Group will cover exchange of data on the cruise industry, joint marketing and promotion, and cooperation on infrastructure development. Future areas of cooperation between the ASEAN NTOs and STOM may also include air services liberalization, intra-ASEAN airline cooperation and other transport measures to promote and facilitate intra-ASEAN tourism and travel.


Telecommunications Cooperation

The major accomplishments in intra-ASEAN cooperation in telecommunications regulatory, policy and strategic issues include: (a) the designation of common ASEAN frequency bands for one-way and two way paging services to facilitate roaming and free circulation of paging subscriber units within the region; (b) the adoption of ITU-T Recommendation E.161 Option A as ASEAN's alphanumeric keypad layout standard; (c) the adoption of procedures for numeric and alpha-numeric radio paging input via telephone keypad, to facilitate trans-national roaming; (d) cooperation in type-approval of telecommunications terminal equipment and testing capabilities, with the eventual conclusion at the 5th ATRC Meeting of the ASEAN Mutual Recognition Arrangement for conformance testing; and (e) cooperation in regional broadband interconnectivity, to address the interconnectivity and interoperability of the National Information Infrastructure of the ASEAN countries, by way of developing the ASEAN Information Infrastructure.

ASEAN shall develop and implement a Plan of Action on regional broadband interconnectivity, which addresses the policy and regulatory environment, universal access, private sector participation, technical standardization/harmonization, information/content development, data security and intellectual property rights and cooperative applications. Concomitantly, ASEAN shall intensify cooperation in ensuring seamless roaming of telecommunications services and in facilitating intra-ASEAN trade in telecommunications equipment and services.

The ASEAN Telecommunication Regulators' Council had its fourth annual meeting (4th ATRC) in Bangkok in July 1998. ASEAN member countries are engaged in telecommunications cooperation activities in the sub-regional groupings like Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and the Greater Mekong Subregion (GMS).


VIII. ENERGY

The implementation of the ASEAN Medium-Term Programme of Action on Energy Cooperation (1995-1999) has achieved the following results: (a) strengthened regional institutional capabilities and intensified human resource development programs; (b) renewed focus on policy coordination and project development activities such as the expanded electricity interconnection arrangements, Trans-ASEAN Gas Pipeline Project, NRSE commercialization initiatives, ASEAN coal study update and the Energy Policy and System Analysis Project; (c) enhanced technical networking and information resource base; and (d) greater public awareness of ASEAN energy cooperation activities. The successor instrument, the ASEAN Plan of Action for Energy Cooperation 1999-2004, is expected to be adopted by the ASEAN Ministers on Energy in July 1999.

In terms of the priorities of the ASEAN Vision 2020, the 16th ASEAN Ministers of Energy Meeting (AMEM) adopted the Conceptual Planning Framework for the Hanoi Plan of Action. Built on the positive developments of the 1995-1999 Medium-Term Programme, the planning framework provides broad policy and implementation initiatives to pursue the early realization of the trans-ASEAN energy networks covering the ASEAN Power Grid and Trans-ASEAN Gas Pipeline Projects, among others. The 16th AMEM adopted the annual Work Program/Action Plan of the sub-sector networks on Coal, Energy Efficiency and Conservation (EE&C) and New and Renewable Sources of Energy (NRSE). The energy ministers agreed that the coal sub-sector network will be transformed into an independent ASEAN Forum on Coal (AFOC), and encouraged greater private sector participation in future EE&C activities.

The 16th AMEM/SOME agreed on the establishment of an ad-hoc SOME Experts Group to develop the policy framework and implementation modalities for the HPA's energy action agenda. This SOME Experts' Group Meeting on the ASEAN Plan of Action for Energy Cooperation 1999-2004, which met in Jakarta in November 1998, considered the first official draft of the Plan of Action. A planning workshop amongst ASEAN energy planners, under the auspices of the ASEAN Centre for Energy, will be held in April 1999 in Singapore, to finalize the draft ASEAN Plan of Action for Energy Cooperation, for submission and adoption in the SOME/17th AMEM.

The AMEM/SOME has also endorsed two new electricity interconnection projects, upon the recommendation of the 14th Meeting of the Forum of the Heads of ASEAN Power Utilities/Authorities (HAPUA XIV, Makati City, March 1998), leading to the expansion of the ASEAN Power Grid Project to 10 interconnection projects. A proposed masterplan study for ASEAN Power Grid Interconnection was proposed as a timely initiative to move forward the ASEAN vision of electricity interconnection. ACE will undertake the masterplan study, with the HAPUA Interconnection Task Force acting as the Project's Steering Committee.

Pursuant to the 14th AMEM's decision to transform the ASEAN-EC Energy Management Training and Research Centre (AEEMTRC) into an ASEAN formal institution, the ASEAN Foreign Ministers concluded in Manila in May 1998 the Agreement on the Establishment of the ASEAN Centre for Energy. ACE was officially inaugurated on 4 January 1999 in Jakarta to accelerate the integration of energy strategies in ASEAN by providing relevant information, state-of-the-art technology and expertise to ensure that, over the long term, the necessary energy development policies and programs are in harmony with economic growth and the environmental sustainability of the ASEAN region. The ACE Business Plan has been adopted and the Interim Governing Council was convened in November 1998 in Jakarta.

The Second ASEAN Energy Business Forum (AEBF) was held in Manila in December 1998 with the theme Challenges and Opportunities in ASEAN Energy. The 2nd AEBF examined the regulatory and institutional framework to facilitate ASEAN energy development, challenges of financing regional energy development, opportunities in natural gas and power sector development, among other subjects.

In ASEAN cooperation in the Oil and Gas sub-sector, the ASEAN Council on Petroleum (ASCOPE) had its 24th Council Meeting in Kuala Lumpur in November 1998. Its 46th and 47th national committee meetings were held in Singapore and Bangkok in April 1998 and November 1998, respectively. ASCOPE continued to be an effective forum for technical discussions, exchange of business data and experiences through workshops, seminars, training, and personnel exchange programs, which benefited some 378 participants. ASCOPE has completed comparative studies on production sharing contracts and similar legal transactions and on the laws and regulations on the domestic sale, transportation and distribution (including licensing) of petroleum products; laboratory test correlation programs; and studies on the petrochemical industry development and impact of the tax structure of ASEAN countries. Its 1999 work activities cover comparative studies on the impact of oil deregulation laws and business laws; joint research on catalytic converters for two stroke motorcycle engines; and a study on the habitat of oil and gas in the deltaic sediment of the ASEAN region, among other projects. The 24th Council Meeting agreed that ASCOPE would henceforth be business oriented, in the face of a more challenging and global economic environment.

For the implementation of the trans-ASEAN energy networks under the Hanoi Plan of Action, ASCOPE will take the lead in the Trans-ASEAN Gas Pipeline Project. The 24th ASCOPE Council Meeting established a task force for the purpose, to be coordinated by Malaysia. This task force will be the platform to determine the feasibility of the regional gas pipelines, taking into account the market, financial and legal regimes of the ASEAN member countries. The implementing Plan of Action on Trans-ASEAN Gas Pipeline will be submitted for consideration of the 17th AMEM in July 1999. A Forum on Trans-ASEAN Gas Pipelines and Power Grids to examine institutional, legal, commercial and management issues is planned in Malaysia in September 1999.

With regard to the ASEAN Power Grid Project, the 16th AMEM requested HAPUA to adopt an integrated and coordinated planning and policy approach for its implementation to enhance intra-regional electricity trade, develop business opportunities, and promote joint or cross-border investment in energy projects. To ensure that the interconnection arrangements for the electricity grid and the gas pipeline network would complement each other, the Special SOME in November 1998 agreed to establish a mechanism through which ASCOPE and HAPUA can undertake dialogue, consultation and exchange of technical information.

In the ASEAN Electricity sub-sector, the ASEAN-EU Advisory Panel on Energy and AEEMTRC co-organized a high-level Roundtable Discussion on Electricity Interconnection in Singapore in July 1998. The roundtable deliberated on several topics pertinent to the realization of the ASEAN Power Grid and recommended a masterplan study on ASEAN Power Grid Interconnection with possible EU technical assistance. As a follow-up, a Study Tour in Europe on Electricity Interconnection was held in October 1998. It culminated into the second Roundtable Discussion on Electricity Interconnection and Deregulation in Brussels, which was attended by 60 senior executives and managers from ASEAN and European electricity companies and utilities, ASEAN energy officials and other ASEAN and EU energy specialists. ACE is organizing a Workshop on ASEAN Electricity Interconnection and another roundtable discussion between HAPUA and the Advisory Panel, to precede the SOME/17th AMEM meetings in Bangkok.


IX. DEVELOPMENT OF GROWTH AREAS


To narrow the gap in the levels of development among Member States and to reduce poverty and socio-economic disparities in the region, ASEAN continued to support the implementation and further development of growth areas - Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT), Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), and the inter-state areas along the West-East Corridor (WEC) of the Mekong Basin in Vietnam, Laos, Cambodia and North-eastern Thailand within the ASEAN Mekong Basin Development Cooperation scheme.


X. TOURISM


As a result of the economic downturn, some ASEAN Member Countries experienced declines in tourist arrivals, hotel occupancy and tourism receipts. Overall, the ASEAN region posted a 9.5% decline in 1998 tourist arrivals from the 1997 level. Notwithstanding this, ASEAN remains in a good position to attract long-haul inbound tourism from Western Europe, North America, Japan and Australia, as ASEAN remains a "good value for money" tourist destination.

The ASEAN National Tourism Organizations (ASEAN NTOs) continue to implement the Plan of Action on ASEAN Cooperation in Tourism, which was adopted at the 1st Meeting of ASEAN Tourism Ministers (M-ATM) in January 1998 in Cebu City. The Plan has five (5) strategic themes: (a) marketing the ASEAN region as a single tourism destination; (b) encouraging tourism investments; (c) tourism manpower development; (d) environmentally sustainable tourism; and (e) facilitation of intra-ASEAN travel. At the same time, the ASEAN NTOs has formulated the Tourism.


Action Agenda for the Hanoi Plan of Action (HPA).

In line with the Plan of Action and the HPA activities, the ASEAN Tourism Ministers have resolved to implement the Visit ASEAN Millennium Year (VAY) Program in the year 2002. An interim secretariat has been established in the Philippines to detail the work program and the implementation scheme for the VAY 2002, which is to be carried out at two levels in greater partnership with the private sector. At the generic level, all member countries will co-operate with equal financial contributions, to develop and market the branding and image positioning of VAY 2002. At the market-specific level, member countries will pursue marketing activities in targeted markets with the participation of one or more other Member Countries. Funding support from the private sector and the ASEAN Dialogue Partners shall be worked out.

The Tourism Ministers have also resolved to further increase tourism investments into the region by accelerating trade liberalization and removing all obstacles to the free flow of tourism services, in line with the new rounds of negotiations under the ASEAN Framework Agreement on Services (AFAS). In this regard, the 3rd M-ATM in January 2000 will be considering an implementing package of commitments similar to the set of bold economic measures adopted at the Sixth ASEAN Summit, to restore business dynamism and spur economic recovery in the region.

An ASEAN Tourism Investment Guide, which was the first activity under the HPA tourism agenda, was launched on the occasion of the 2nd M-ATM. This Guide consists of information pertaining to investment climate, infrastructure development, economic indicators and policies, financial framework, statutory requirements for setting up businesses, and contact agencies of ASEAN member countries. The ASEAN NTOs also agreed to hold joint investment seminars and joint investment overseas missions in the effort to increase tourism investments in the ASEAN region.

The Wonders of Southeast Asia, an official thematic tour packaging publication under the auspices of the AEM - MITI (Japan) Experts Group on Tourism for Cambodia, Laos, and Myanmar, was also launched during the occasion of the 2nd M-ATM. The publication will help the travel trade to formulate better thematic packages to attract more tourists into the ASEAN region. In July 1999, an ASEAN Map showcasing the major tourist destinations in the region will be published by the ASEAN Secretariat.

The Study on the Facilitation of Intra - ASEAN Travel conducted by the Tourism Authority of Thailand for the ASEAN NTOs has been completed with several recommendations and bold initiatives in nine areas of concern, i.e., airlines and aviation reforms; actions required of the National Tourism Organizations; facilitation measures; actions required of the private sector-led travel trade associations; cruise tourism; e-commerce applications; education, culture and cuisine; meetings, incentives, conventions and exhibitions; and currency issues. The modalities for the eventual implementation of the priority areas will be considered in time for the ASEAN Tourism Forum 2000 (ATF 2000) in Bangkok in January 2000

The ASEAN NTOs Fund has been established for the purpose of implementing priority projects to further cooperation in joint tourism activities. Member countries will be contributing an annual amount of US$ 5,000 each, for a three-year period from 1999-2001. The ASEAN Secretariat will serve as the custodian of the ASEAN NTOs Fund.

The ASEAN Promotional Chapters for Tourism (APCTs) have been revived to pursue mutually beneficial tourism activities.

In December 1998, the ASEAN Tourism Association (ASEANTA) launched the ASEAN Air Pass that offers discounted airfares to long-haul travellers at a fixed rate to multiple ASEAN destinations. An ASEANTA Website that includes a module to disseminate information on ASEAN events will be launched in June-July 1999. Using its own resources, ASEANTA made considerable progress in marketing ASEAN as a single destination by way of promotional/advertising materials, production of the ASEAN directory of tourism products and services, human resources development programs, among other means.


XI. INTELLECTUAL PROPERTY

The ASEAN Working Group on Intellectual Property Cooperation (WGIPC) continued to implement the activities of the ASEAN Framework Agreement on Intellectual Property Cooperation through the ASEAN Programme of Action on Intellectual Property Cooperation 1996-1998. The activities in the programme include measures to enhance and strengthen intellectual property protection, enforcement, administration and legislation. In addition, the activities in the programme include measures to promote public awareness and private participation.

Recognizing that some of the activities in the programme of action have long-term objectives, the WGIPC, at its ninth meeting, on 5-6 August 1998 in Manila, extended the ASEAN Programme of Action on Intellectual Property Cooperation 1996-1998 to 1999-2001. It was agreed that the activities contained in the Programme of Action could be reviewed during the extension period. One of the long-term objectives of the Programme of Action is to establish an ASEAN Regional Trademark and Patent Filing System by the year 2000 to facilitate the filing and registration of trademark and patent applications in ASEAN. When the ASEAN Regional Trademark and Patent Filing Systems are established, the ASEAN Working Group on Intellectual Property Cooperation will consider establishing a regional fund for trademarks and patents. The funds will come from a certain percentage of the fees generated from the use of the regional filing systems.

Cooperative activities with the World Intellectual Property Organization (WIPO) have been undertaken on the basis of an annual ASEAN-WIPO Consultative Meeting. The programme of activities for 1998-1999 was endorsed by the Fifth ASEAN-WIPO Consultative Meeting on 10 March 1998 at WIPO Headquarters in Geneva.

Over the past year, the following activities were jointly undertaken by ASEAN countries and WIPO: (a) Sub-Regional Colloquium for Judges on the Enforcement of Intellectual Property Rights; (b) International Seminar on Internet and Intellectual Property; (c) Regional Roundtable on Collective Management of Copyright and Related Rights; (d) Regional Seminar on WIPO Copyright Treaties (WCT) and WIPO Performances and Phonograms Treaty (WPPT); (e) National Symposium on Industrial Property Law for Judiciary; (f) national training courses on international protection of copyright and neighbouring rights; and (g) national seminars on intellectual property matters held in Cambodia, Laos, the Philippines and Vietnam.

In addition, WIPO assisted individual ASEAN Member Countries in providing a WIPO model law, legal advisory assistance, human resource development and institution building.

In parallel with the ASEAN-WIPO cooperation programme, ASEAN has been pursuing an intellectual property rights technical assistance programme with the EC. The first five-year ASEAN-EC Patents and Trademarks Programme (ECAP) was concluded in June 1997. Substantial efforts were undertaken under the programme to improve the availability of patent documentation and public awareness. Such efforts included the supply of EPO CD-ROMs, production of regional and national ASEANPAT CD-ROMs, connection of offices to INPADOC, organization of workshops, colloquia and study tours, creation of an ASEAN Video, and training of office staff. ASEANPAT is a cumulative CD-ROM containing the bibliographic data and abstracts in English of patent publications from 1980 (where appropriate) onwards. The programme has contributed significantly to the modernization and strengthening of ASEAN's administration and enforcement of intellectual property rights.

The satisfactory conclusion of the first ECAP programme has led to the formulation of the second five-year ASEAN-EC Regional Cooperation Programme on Intellectual Property Rights. The general objective of the programme is to increase ASEAN-EU trade and investment while the specific objective is to achieve further economic cooperation by upgrading ASEAN intellectual property rights protection. The Memorandum of Understanding (MOU) on ASEAN-EU Intellectual Property Rights Cooperation Programme to implement the new programme of cooperation on intellectual property rights has been negotiated and is now ready for signing between individual ASEAN Countries and EU.


XII. SMALL AND MEDIUM SCALE ENTERPRISES

The ASEAN Small and Medium Scale Enterprise (SME) Agencies Working Group has been reactivated. At its meeting in Manila in September 1998, it was agreed that the Working Group would meet on a more on a regular basis to accelerate cooperation in the SME sector. Taking into account the latest developments and the changing regional and global economic environment, the ASEAN Plan of Action on SME Development was revised. The revised Plan of Action covers SME development in the areas of information, human resource development, market, finance, and technology. In addition, a separate Working Group on Supporting Industries/Small and Medium Enterprises/Rural Industrialization was created under the purview of the AEM-MITI Economic and Industrial Cooperation Committee (AMEICC).

An "India-ASEAN SMEs Partenariat" was held on 10-11 November 1998 in New Delhi. It aimed to facilitate networking among ASEAN and Indian SMEs. Twenty-eight participants from ASEAN countries attended the event. Broadly, the areas of interest included computer software, food processing, gems and jewelry, medical equipment and electronic components, consumer products, small machinery, educational services, storage and material handling. Over 100 Indian companies visited the ASEAN stalls and held one-to-one business meetings. The Partenariat evoked a lot of interest among the business community in India, resulting in the signing of several business contracts.


XIII. FOOD, AGRICULTURE AND FORESTRY

Cooperation in Food

The overall food situation in the region over the past year was satisfactory. However, some ASEAN Member Countries had to import large quantities of rice due to a decline in rice production caused by unfavourable weather conditions.

ASEAN continues to cooperate with the Food and Agriculture Organization (FAO) to explore the possibility of establishing an ASEAN food security information system (AFSIS). An AFSIS would enable Member Countries to effectively forecast, plan and manage their supplies and utilization of basic foods. It would also provide information for investors to invest in food production.

The ASEAN Ministers for Agriculture and Food (AMAF) have endorsed the ASEAN General Guidelines on the Preparation and Handling of Halal Food, which is intended to further promote the expansion of intra-ASEAN trade in food, especially in meat-based food. Member Countries are also compiling the ASEAN Food Additives which are to be incorporated in the homepage of the Department of Islamic Development of Malaysia and subsequently inter-linked to the ASEANWeb and to the Website of the Islamic Religious Council of Singapore. The compilation will also include information on the manufacturers and producers of halal additives.

AMAF has endorsed the Model Protocol for the Use of Irradiation as a Quarantine Treatment for the Import and Export of Fresh Fruits and Vegetables for ASEAN. The draft of the Harmonized Regulations on Food Irradiation for ASEAN has been approved by SOM-AMAF for endorsement by the 21st Meeting of AMAF in September 1999.

The ASEAN-Australia Economic Cooperation Programme (AAECP) - Phase III Project on Quality Assurance Systems for ASEAN Fruits (QASAF) - Fresh and Minimally Processed has reached its third and final year of implementation. To date, apart from in-country research activities, three regional workshops on quality systems, minimal processing and food safety for minimal processing of fresh fruits; four in-country workshops on understanding quality systems; and one study tour to Australia on quality assurance systems for post-harvest handling and marketing of tropical fruits have been conducted under the project. The project will end at the end of 1999.


Cooperation in Agriculture

Member Countries have completed preparing a comprehensive endemic pest list for mango and rice, which forms an important part of the harmonization process. A comparative analysis of the data will be carried out. Current work plans include preparation of endemic pest list for coconut, ginger, dendrobium, potato, groundnut, black pepper and orange.

Ten MRLs for ten combinations of the five selected pesticides (i.e Chlorpyrifos, Methamidophos, Monochrotophos, Dimethoate, and Dithiocarbamates) and the two vegetables (cabbage and tomato) have been endorsed by AMAF. The number of pesticides and vegetables will be increased for future harmonization and, towards this end, lists of vegetables of interest to Member Countries are also being compiled. Member Countries are considering harmonization of MRLs of the five pesticides for all types of vegetables. Ten more pesticides will be added to the list.

Member Countries have made progress in the harmonization of livestock sanitary measures to promote and facilitate intra-ASEAN trade in livestock and livestock products. The Manual on ASEAN Standards for Animal Vaccines (38 vaccines), Manual for the ASEAN Rules and Procedures for the Registration of Animal Vaccines, Manual on ASEAN Standards of Good Manufacturing Practice (GMP) for Animal Vaccines, Manual of ASEAN Code of Practice for Commercial Storage, Transportation and Handling of Animal Vaccines, and the Manual on ASEAN Criteria for Accreditation of Animal Vaccine Testing Laboratories were launched by the 20th Meeting of ASEAN Ministers of Agriculture and Food (AMAF) in Hanoi on 18 September 1998 and distributed to Member Countries for use by government agencies and the private sector.

ASEAN continued to cooperate with the Organisation Internationale des Epizootics (OIE) in the control and eradication of foot-and-mouth disease of bovine animals in the region. Member Countries, through bilateral arrangements, also continue to monitor the spread of diseases through cross-border movements of live animals in the effort to control the diseases.

Cooperation in fisheries continued to be focused on aquaculture development and the development and improvement of fisheries postharvest technologies and harmonization of quality assurance of fishery products. The Manual on Good Shrimp Farm Management Practices was officially launched by the 20th Meeting of AMAF in Hanoi on 18 September 1998 and distributed to all Member Countries for use. A manual on the guidelines for producing "High Health" shrimp broodstock has be drafted.

Member Countries are implementing the Hazard Analysis and Critical Control Point training programme, which was developed under the already completed ASEAN-Canada Project on Fisheries Post-harvest Technology - Phase 2. A survey on traditional fish products in the ASEAN region is being implemented. A framework compilation of fisheries sanitary measures for the facilitation of intra-ASEAN trade in fish and fisheries products has been prepared. For a start, the harmonization effort is confined to fish diseases and quarantine.

The Programme and Work Plan for the ASEAN Sea Turtle Conservation and Protection, as stipulated in the Memorandum of Understanding on ASEAN Sea Turtle Conservation and Protection, was endorsed by the 20th Meeting of AMAF in Hanoi. A workshop has been scheduled for June or July 1999 in Malaysia to review the strategies and decide on a time frame for the implementation of the action plan.

Thailand has identified 40 acres of land on the bank of the Mekong River in Chiang Mai Province to build a research centre for ASEAN-Mekong Basin Fisheries Development Cooperation, while Singapore has trained participants from Myanmar in fisheries post-harvest technology. A mechanism for collaboration between ASEAN and the Southeast Asia Fisheries Development Center (SEAFDEC) for sustainable fisheries development in Southeast Asia region has been established. Three projects have been agreed for implementation and another four have been identified for consideration.

Member Countries have completed implementing all the planned activities under the Networking Project on Promotion and Intensification of Application of Integrated Pest Management (IPM) on Fruits and Vegetables. Regional training in integrated pest management (IPM) in fruits and vegetables for agricultural extension officers has been conducted in Thailand and Indonesia, respectively. IPM training packages for vegetables and durian are being published by the ASEAN Secretariat for use as manuals by ASEAN Member Countries. Member Countries are pursuing training at the national level to promote and intensify the application of IPM practices among vegetable and fruit growers. They have also identified the types of crops in which they will take the lead in hosting IPM training and developing training modules during 1999-2004 period.

The Eighth ASEAN Farmers' Week was held in Brunei Darussalam on 20-25 August 1998 in conjunction with its Farmers' Day Celebration. The Ninth ASEAN Farmers' Week will be held in Vietnam in the year 2000.


Cooperation in Forestry

In the effort to accelerate the implementation of UNCED decisions on forestry and to attain the ITTO Objective Year 2000, Member Countries have agreed to establish a set of Regional Criteria and Indicators (C&I) for sustainable forest management (SFM) in the ASEAN region. Member Countries continued to undertake activities for joint approaches to and positions on international forestry and timber issues, in particular at the Intergovernmental Forum of Forest to coordinate positions on forestry matters and to identify measures to resolve pending issues, such as new and additional financial resources, market access, forest products certification, labeling, and proposal for international legal instruments on forests. The effort has been fruitful in the area of CITES. ASEAN has agreed to work towards harmonization of standards and specifications of ASEAN forest products. Member Countries have also agreed to enhance cooperation and to exchange information and technology for optimum utilization of diverse raw materials, including alternative raw materials other than wood fibre. This cooperative initiative has been realized with the establishment of the ASEAN Senior Officials on Forestry (ASOF) Meeting.


Cooperation in Agriculture and Forest Products Trade and Promotion

ASEAN Member Countries continued with their joint efforts to promote the export of the region's frozen chicken, frozen shrimp, canned tuna, canned pineapples, tapioca, pepper, cocoa, coconut oil, palm oil, carrageenan, coffee, and forest products. On the low prices of rubber, the ASEAN Ministers-in-Charge of Rubber met in Phuket in 1998 and discussed possible areas of cooperation to stabilize prices of rubber at a remunerative and fair price level.

ASEAN Member Countries have taken collective stands on several issues relating to regional and international trade in agriculture and forest products. After consulting with the ASEAN Vegetable Oils Club (AVOC), ASEAN agreed to continue to request the EU for the rescission of Article 2(2) of the EC's Directive on the Hygiene of Foodstuffs.

ASEAN is also pursuing the issue of EU's discriminatory tariffs on ASEAN cocoa beans and cocoa products. ASEAN Member Countries have agreed to coordinate joint stands at the GODEX Alimentarius Commission (GAC) on the proposed EU's Draft Regulation to Establish Maximum Level of Aflatoxin in Milk, Groundnut and Cereals. Member Countries have also agreed to meet informally prior to the meetings of the APEC Experts Group on Early Voluntary Sectoral Liberalization (EVSL) to discuss issues and coordinate joint positions for the agriculture, fisheries and forest products sectors.


Country Initiatives

The 20th Meeting of the AMAF agreed to extend the period of implementation of the MOU on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme to another five-year term starting from 25 August 1999.

Several ASEAN Member Countries have initiated projects for regional cooperation - Singapore's Initiative on Harmonization of Regulations for Agricultural Products Derived from Biotechnology; Thailandís Initiatives on ASEAN Shrimp Industry Task Force (ASITF) and on Environmental and Conservation Issues Related to Trade in ASEAN Agricultural Products; and the Philippines' Initiative on ASEAN Integrated Pest Management (IPM) Knowledge Network.

The draft ASEAN General Guidelines on the Release of Agriculture-related Genetically Modified Organisms (GMOs) and their Products have been prepared by the Task Force on Harmonization of Regulations for Agricultural Products Derived from Biotechnology and a proposal has been submitted to implement the Thailand - initiative project on Environmental and Conservation Issues Related to Trade in ASEAN Agricultural Products.

The Terms of Reference (TOR), structure and funding of activities of ASITF have been prepared. ASITF would look into the possibility of harnessing private sector and Member Country support, and collaborating with the Southeast Asian Fisheries Development Center (SEAFDEC) and other agencies in the implementation of its activities.

The IPM Knowledge Network and Regional Center was inaugurated on 24 June 1998 and a Regional IPM Planning Workshop was conducted on 24-26 June 1998. The Regional Center has also begun gathering IPM knowledge capital from various sources and will be converting this information into electronic files. The Center, in collaboration with the Philippine's IPM Knowledge Hub, has also developed and updated training handbooks and manuals. Future actions will include defining the knowledge management strategy of the IPM Regional Center and the Country Hubs, repackaging the Network proposal and beginning negotiations with prospective donors.

The 20th Meeting of AMAF in Hanoi approved five new Country initiatives proposed by Malaysia, Singapore and Thailand. These are: (a) Malaysia's Initiative on Sustainable Forest Management in ASEAN (which comprises three sub-initiatives: Development of Criteria and Indicators (C&I) for Sustainable Forest Management in ASEAN; Forestry Information System for the ASEAN region; and Demonstration Area Network on Sustainable Forest Management); (b) Singapore's Initiative on Establishment of an ASEAN-AVDRC (Asian Vegetable Development and Research Centre) Regional Network for Vegetable Research and Development; (c) Singapore's Initiative on A Study to Identify High-Impact Investment Opportunities in Key Areas under the Food, Agriculture and Forestry Sectors of ASEAN and to Provide Essential Information for Investment Decisions on these Opportunities; (d) Vietnam's Initiative on Assessment of the Impacts of Regional Economic and Financial Crisis on Agriculture, Forestry and Fisheries in ASEAN Member Countries and Identification of Measures to Overcome the Situation; and (e) Vietnam's Initiative on ASEAN Task Force on Protected Forest.

 

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