Committee on Industry, Minerals and Energy
ASEAN Economic Ministers Meeting on Industry
The ASEAN Economic Ministers on Industry
held their first meeting in Denpasar, Indonesia on
29-30 September 1980. Besides discussing aspects
of the General Guidelines on ASEAN
Industrial Complementation and alternative procedures
for undertaking new ASEAN industrial
projects, including funding for feasibility studies,
the Meeting agreed, among others, that for
industrial cooperation the participation of all five
ASEAN countries would no longer be required,
provided that non-participating countries are fully
informed to ensure that their national interest are
not adversely affected by such a project.
The AEM on Industry also agreed to convene a
meeting of Boards of Investment representatives to
discuss areas where member countries can cooperate
in providing information on fiscal incentives
and to formulate specific mechanisms to facilitate
intra-ASEAN private sector investments.
It was agreed that the AEM on Industry should
meet on a regular basis.
ASEAN Industrial Projects (AIP)
ASEAN Urea Project (Indonesia)
The construction contract between the project
company, PT ASEAN Aceh Fertiliser (AAF) and
Toyo Engineering Corporation was signed on 16
December 1980. A lump sum fixed price of US$
297 million was agreed on. Based on the prices
quoted by the contractor, a review of the project
cost showed a cost over run of US$ 90 million.
Inspite of this, a re-evaluation of the project still
showed it to be economically viable, and the
Japanese Government agreed to provide
the additional US$ 90 million loan. The exchange of
notes for this additional loan between the
Government of Indonesia and of Japan was signed
in Jakarta on 30 March 1981. Construction of
the plant is expected to start at the end of March
1981 for completion in March/April 1984.
ASEAN Urea Project (Malaysia)
The Joint Venture Agreement for the ASEAN
Urea Project (Malaysia) was approved by the
Twelfth COIME Meeting in Bali, 25-27 September 1980.
Subsequently, the Shareholder Entities
convened in Kuala Lumpur on 6 October 1980 to
sign the Joint Venture Agreement and Memorandum
and Articles of Association of the company.
The project company, ASEAN Bintulu Fertilizer
Sdn Bhd (ABF) was officially incorporated on 6
December 1980 and had its First Meeting of the
Board of Directors in Kuala Lumpur on 26-27
February 1981. The Malaysian Government has
obtained a loan package of 48 billion yen
(US$ 225,8 million), constituting 70% of the cost
of the project from the Japanese Government.
The Board of Directors has accepted in principle
this Japanese financing end of April 1981. Based
in Bintulu, Sarawak, the plant is targetted to be
on stream in 1984.
ASEAN Copper Fabrication Project
(Philippines).
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In view of raw material problems which cast
doubt on the feasibility of the ASEAN Integrated
Pulp and Paper Project (Philippines), the Philippines
informed the Thirteenth Meeting of
COIME, held in Kuala Lumpur, Malaysia, on
15-17 January 1-981 that it is substituting a
copper fabrication plant as its ASEAN Industrial
Project. This is estimated to have a capital
investment of US$ 180-200 million. A study
team has since been commissioned to conduct a
feasibility study on the project and a preliminary
report on the feasibility of the project is expected
by June 1981. The Eleventh Meeting of the
AEM approved this project as the Philippines AIP
subject to the feasibility study on its economic
viability.
ASEAN Rock Salt Soda Ash Project
(Thailand)
After the Thai Governments' approval of Laem
Cabang as the project site, a Japan International
Cooperation Agency (JICA) team conducted a
feasibility study in Thailand on 10 September to
2 October and submitted its final report on 2
April 1981. The Meetings of Experts Group and
the Shareholder Entities of the Project were
convened in order to consider the JICA Evaluation
Study Report on the Project and prepare the
supplementary agreement, the Memorandum of
Association, the Company Regulations, and the
selection of Project Management Consultant for
the Project. The plant site for the Project will be
Mabtapud, an area near Sattahip.
To facilitate the implementation of future
ASEAN Industrial Projects, the Tenth AEM
agreed that member countries may source funds
for AlPs on an internationally competitive basis.
They may also proceed with a project from
feasibility study up to the bidding out of the
tenders stage before submission for AEM approval
as an AIP.
At the Eleventh AEM Meeting, the AIP scheme
was given a sharp push forward. At this Meeting
it was agreed that each country would be allowed
to consider up to three AIPs at any one time.
COIME was directed to study the adoption of a
policy on a prescription period for proposed
AlPs.
ASEAN Industrial Complementation
The Tenth AEM laid down the General Guide lines
on ASEAN Industrial Complementation
(AIC) and directed COIME to finalize the Basic
Agreement on AIC on this basis. This was
effected at the Thirteenth COIME Meeting in
Kuala Lumpur on 15-17 January 1981. At the
Eleventh Meeting of the AEM the Basic Agreement
was further considered and revised before
initialling by the Ministers. It will be formally
signed by the Foreign Ministers in June in Manila.
The main development in the AIC scheme
relates to the question of exclusivity. Article IV
of the final COIME draft of the Basic Agreement
on AIC embodies the agreement reached within
COIME. Paragraph 1-4 of the Article reads:
1. An Existing product in an AIC package
shall, from the date of AEM final approval of
such package, enjoy exclusivity privileges for a
period of two (2) years.
2. A product is deemed to be an Existing
product in an AIC package if it is already being
manufactured in ASEAN at the time COIME
considers that product for possible allocation.
Any product not covered by the above mentioned
definition of Existing product shall be deemed
New
3. A New product in an AIC package shall,
from the date of AEM approval of such AIC
package, enjoy exclusivity privileges for a period
of four (4) years.
4. Exclusivity shall mean:
(i) For the country allocated a particular pro-
duct, it would be entirely at its discretion to
decide as to how it would organize its production
facilities to meet the ASEAN requirements for
that product.
(ii) For the other participating countries such
countries cannot set up new production facilities
or expand existing ones to make the same
product as that of the country for which such
product was. allocated unless 75% of its production
is for export outside the ASEAN region.
The Eleventh AEM Meeting revised the Basic
Agreement in the light of representations made
by the ASEAN-CCI at various COIME Meetings as
follows:
"A New AIC Product in an AIC Package shall
enjoy exclusivity privileges for a period of three
years from the actual date of start-up or from the
target date of start-up agreed at the time of AEM
approval of such AIC package, whichever date
comes first. In exceptional cases where a New
AIC product in an AIC package requires a longer
period of exclusivity, the AEM may consider
extending the period of exclusivity by another
one year".
The Eleventh AEM further agreed that:
(i) The Basic Agreement is approved on the understanding
that a non-participating member
country in an AIC package will voluntarily waive
its right under the PTA to avail of the tariff preferences
for the products in that package during
the exclusivity period; and
(ii) There is no need to amed the Basic Agreement
in order to allow the granting of special
non-tariff preferences beyond the exclusivity
period since this is a matter that is within the
prerogative of the countries concerned to decide
on a bilateral basis.
On the question of negotiating guidelines and
machinery for AIC products, the Eleventh AEM
Meeting, on the basis of agreement reached at the
Twelfth COTT Meeting agreed on the following :
(i) Preferences shall be negotiated in two parts
namely:
(a) Tariff preferences, which shall be multilaterised, to be negotiated
within the ambit of COTT.
(b) Other preferences, particularly in respect
of mandatory sourcing and local content
accreditation which shall be on a bilateral
basis. Such bilateral preferences shall be
negotiated within COIME.
Where tariff and other preferences are negotiated
the preferences shall be treated as a
package.
(ii) Margins of Tariff Preference negotiated shall
be of a continuing nature beyond the exclusivity
period and shall be greater than prevailing tariff
preferences accorded to other items under the
PTA.
The Tenth AEM Meeting approved for allocation as
the first package for automotive complementation
the following Existing products:
Indonesia : Diesel engines (80-135 h.p.)
Malaysia : Spokes, nipples, drive chains for
motorcycles and timing chains for
motor vehicles
Philippines : Ford body panels for passenger
cars
Singapore : Fuel injection pumps
Thailand : Carburettors
At the Fourteenth COIME Meeting it was
decided to further expand the product coverage
of the first package of Existing AIC products for
AEM approval. The expanded package as approved by
the Eleventh AEM Meeting is as follows:
Indonesia : Diesel engines (80-135 HP); motorcycle axles; wheel rims for
motorcycles
Malaysia : Spokes and nipples; drive chains
and timing chains; crown wheels
and pinions; seat belts
Philippines : Body panels for passengers cars;
transmissions; rear axles (LCV and
below)
Singapore : Universal joints; oil seals; V belts
Thailand : Body panels for commercial vehicles of one ton and above; brake
drums for trucks; heavy duty sock
absorbers.
.
ASEAN Joint Venture Projects.
.
At the Twelfth Meeting of COIME in Bali,
Indonesia, on 25-27 September 1980, the
ASEAN-CCI presented a proposal for the establishment
of ASEAN Joint Venture Projects. Conceptually
these are the private sector equivalents
of the AIPs enjoying exclusivity privileges similar
to AIC products. The proposed Guidelines on
AJVPs were reviewed by the ASEAN Boards of
Investment representatives at their first meeting
in Manila on 11-12 December 1980 and the
revised Guidelines were considered by the
Thirteenth COIME Meeting where it was agreed
to draw up a draft Basic Agreement on AJVPs on
the same format as the Basic Agreement on AIC.
Ms draft Basic Agreement was considered at the
Fourteenth Meeting of COIME in Manila on
8-11 April 1981..
.
.
ASEAN Industrial Standarization.
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The COIME Experts Group on ASEAN Industrial
Standardization held its first Meeting in
Bandung, Indonesia on 18-20 March 1981.
ASEAN has agreed to seek Third Countries'
fmancial and technical assistance for this project..
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Cooperation in Energy.
.
The First Meeting of the AEM on Energy
Cooperation was held in Bali, Indonesia on
29-30 September 1980. Three areas of cooperation
were discussed, namely exchange of information,
energy cooperation and institutional arrangements..
.
On energy cooperation three approaches were
proposed: a long-term approach particularly directed
towards the development of alternative
energy resources outside oil, a medium-term
approach aimed at increasing exploration and
development activities of oil and gas in the
region, and a short-term approach relating to such
measures as expanding the scope of the emergency
petroleum sharing plan and the establishment
of an ASEAN Petroleum Security Reserve..
.
On institutional arrangements, it was agreed
that the existing ASEAN bodies dealing with
energy cooperation adopt the following division
of work:.
.
a. ASEAN Council on Petroleum (ASCOPE) to
deal with oil and gas matters;.
.
b. COIME to deal with other sources of energy
which have reached the commercial stage; and.
.
c. COST to deal with energy sources which are in
the research and development stage..
.
The AEM Energy Cooperation agreed to meet
on a regular basis. It was also decided that a
meeting on coal, with respect to inventorization,
development, production and utilization, be held
immediately to define areas of cooperation
among member countries..
.
Pursuant to the First AEM Meeting on Energy,
the Thirteenth COIME Meeting agreed to convene
an Experts Group on Non-Petroleum Energy
Sources with terms of reference as follows:.
.
(a) To identify sources of non-petroleum energy
which have already reached their commercial
stage;.
.
(b) To determine specific programs of ASEAN
cooperation in the above mentioned sources
of energy;.
.
(c) To examine in detail the offer of assistance
in the field of energy received from third
countries; and.
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(d) To suggest specific courses of action to avail
of such offers from third countries..
.
The Fourteenth Meeting of COIME recommended
that its programme of work on energy
cooperation be initially focussed on the following
areas of energy sources: coal, gas thermal, hydro,
and uranium..
.
A First Meeting of the ASEAN Experts Group
on Coal was convened in Bandung, Indonesia on
6-7 April 1981. The Meeting recommended the
following:.
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(a) Establishment of a Coal Information Centre.
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(b) Regular Conduct of Joint Coal Market Surveys.
.
(c) Studies on the Distribution and Utilisation
of Coal.
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(d) Joint Undertakings in Survey and Exploration.
.
(e) Joint Undertakings and Joint Ventures in
Coal Mine Development.
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(f) Joint Cooperation with Third Countries.
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(g) Establishment of a Commercial Coal Exchange.
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(h) Arrangements for Preferential Trade in Coal.
.
A Meeting of ASEAN Heads of Power Utilities/
Authorities was held in Jakarta on 13-.-14 April
1981. Besides agreeing on the institutional framework
and modalities for cooperation in the field
of electric power development, the Meeting identified
ten substantive areas/projects for cooperation .
These are micro-hydro power development;
computer application; interconnection of electricity grids;
research, development and engineering;
training; geothermal power development; nuclear
poizer for electric-power generation; rural and
urban electrification; standardization of electrical
equipment; and setting up of an Electric Power
Information Centre..
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The Second Meeting of the ASEAN Economic
Ministers on Energy Cooperation, held in Kuala
Lumpur on 27 April 1981 endorsed, with a few
minor amendments and reservations, the recommendations
of the Experts Group on Coal and
that of the Heads of Power Utilities/Authorities.
The AEM on Energy Cooperation also stressed
the need for energy conservation and ASEAN
cooperation in conservation. It was also recommended
that a new Committee on Energy
Cooperation (COEC) be established. The Eleventh
AEM Meeting approved the various recommendations
of the AEM on Energy Cooperation.
However, on the proposal for the creation of the
Committee on Energy Cooperation (COEC),
the A-EM decided that its creation should be
considered in the framework of ASEAN restructuring..
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Cooperation in Minerals.
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An ASEAN Minerals Cooperation Plan was
formulated by the Working Group on Minerals of
COIME at its Fourth Meeting in Bangkok in
January 1981. This Cooperation Plan was re-
viewed at the Fourteenth COIME Meeting which
noted that of the five components of the Plan,
three components relating to resource development,
industrial integration and the joint acquisition
of technology were deemed immediately
practicable..
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For more information, please refer to the project details
