Committee on Finance and Banking


The Tenth Meeting of the Committee on Finance and Banking (COFAB) was held in Chiang Mai, Thailand on 1-3 November 1982 and the Eleventh Meeting was held in Bangkok, Thailand on 18-20 April 1983. The following are some of the main developments in the work of COFAB.


ASEAN Bankers Acceptance (ABA)


As a measure to help promote intra ASEAN trade, and as an aspect of ASEAN financial cooperation, the ABA scheme was initiated by the ASEAN private sector through the ASEAN Banking Council (ABC) in 1976. Since then the proposal was discussed at various COFAB meetings. The project was also actively pursued by the ASEAN private sector. Consequently, the main outlines of what constitutes an effective and viable ABA scheme has begun to take shape. Various details however still need to be worked out, especially with regard to the size of the secondary market and the structure of ABA trading as well as the scope of private sector participation. This task was referred to the ABC.

Over the past year, however, the private sector seemed to have lost its sense of urgency with regard to the ABA scheme. This may be due to diversions arising from the current international economic crisis accompanied by unprecedentedly high and volatile interest rates, monetary instability, Third World indebtedness and flagging confidence in the international financial system. In spite of this, the ASEAN Banking Council has continued to study the scheme and is scheduled to meet in early June 1983 to further consider its implementation.

Customs Matters

Pursuant to the ASEAN Customs Study Tour from 6 April to 14 May 1981 and the adoption of the Study Team's Report by the ASEAN Working Group on Customs Matters (AWGCM) at its Fifth Meeting in April 1982, various follow-up actions were initiated and proposals received. These cover such diverse areas as customs import and export procedures, container clearance procedures, customs valuation methods, and customs classification and statistical compilation methods. For example, a programme of updated information exchange has been initiated in the fields of customs import and export procedures and various steps were proposed for some harmonisation of ASEAN customs administrative practices and procedures. Thus, the feasibility of standardised air passenger baggage declaration forms used in ASEAN is being studied and a proposal has been received on the simplification of port documents in ASEAN member countries.

The intensification of ASEAN cooperation in customs matters is best exemplified by the formal signing of the ASEAN Customs Code of Conduct by the Heads of ASEAN Customs Administration at the ASEAN Secretariat in Jakarta on 18 March 1983 on the occasion of the Sixth Meeting of the AWGCM. This code covers the basic principles and the standards on customs valuation, classification, techniques and related matters. The main provisions of the Code are as follows:


Valuation

  1. The value for customs purposes of imported or exported merchandise should be based on the actual price at which, at the time and place of importation or exportation as the case may be, such or Iike merchandise is sold or offered for sale in the ordinary course of trade under fully competitive conditions.

  2. When the actual price is not ascertainable, the value for Customs purposes should be based on the nearest ascertainable equivalent of such price.

  3. Values for customs purposes established for past importation or exportation may be used for assessment of values of similar merchandise imported or exported.

  4. The basis of determining the value should be consistent, fair and equitable.

  5. In any dispute, the importer or exporter concerned should be informed of the cause thereof, and should be accorded reasonable opportunity to explain and furnish evidence in support of his case.

  6. After the determination of value, sufficient explanation of reasons and facts involved should be made known to the importer or exporter concerned, if the declared value is not accepted.

  7. The importer or exporter has the right to lodge an appeal within a reasonable period of time and he should be informed of the results of the appeal together with the reasons in case of dismissal.

  8. When the importer or exporter concerned does not cooperate in furnishing relevant evidences or necessary explanations or when there exists strong indication of fraudulent practices, the Customs Authority may take appropriate action to safeguard national interest.

  9. Should it be considered necessary to delay final determination of the dutiable value, the importer or exporter should be allowed to clear his merchandise from Customs control on condition that he furnishes sufficient guarantee in the form of a surety or deposit or some other appropriate instrument covering the ultimate payment of customs duties potentially liable.

  10. Customs valuation should not be used for protective purposes.

  11. The notified or published value, if any, should reflect the value as envisaged under paragraph 1.

  12. Customs Authorities of member countries should cooperate and exchange information on values of merchandise imported or exported which is of mutual interest and benefit.

Classification
  1. ASEAN Customs Tariffs should be based on Customs Cooperation Council Nomenclature (CCCN).

  2. Customs classification rulings should be made known to the importer or exporter concerned, and the ruling which involves principles should be notified to the public. The basis for such ruling should also be made known whenever possible.

  3. ASEAN Customs Authorities should endeavour to establish uniform classification rulings through the exchange of information. Whenever differences on such rulings arise, there should be consultations among Customs Authorities concerned.

  4. An aggrieved party should have the right to lodge an appeal within a reasonable period of time and should be informed of the result thereof together with reasons in case of dismissal.

  5. Should it be considered necessary to delay the determination of the classification of the goods, the importer or exporter should be allowed to clear his merchandise from customs control on condition that he furnishes sufficient guarantee in the form of a surety or deposit or some other appropriate instrument covering the ultimate payment of customs duties potentially liable.

Prevention and Repression

Having due regard to ASEAN countries' constitutional, legal and administrative systems:
  1. ASEAN Customs Authorities should communicate among themselves information useful in the prevention and repression of all forms of smuggling and customs frauds, and on the proper conduct of customs work.

  2. ASEAN Customs Authorities should cooperate among themselves in the investigation of smuggling and other customs frauds. Evidences, witnesses and other assistance necessary in any particular case should be made available when requested.

The Code is designed to serve as a guide to action without the force and effect of a legal instrument. It was merely agreed that "ASEAN Customs Authorities shall endeavour to attain the objectives embodied in the Code".

Insurance Matters


Singapore hosted the 8th Meeting of the ASEAN Insurance Commissioners (AIC) in September 1982. At that Meeting, the Insurance Commissioners agreed to continue the collection and exchange of insurance statistics on a common basis, examine the legal barriers that impede the exchange of insurance business among ASEAN countries and to pursue the possibilities of cooperation with the EEC, Japan and the United States. The Meeting also decided to hold the first ASEAN training course for insurance officials in Manila from 29 November to 17 December 1982. The Insurance Commissioners also pledged firm support for projects of the industry-based ASEAN Insurance Council, particularly the ASEAN Reinsurance Pool which was launched in January 1982.

Good progress was also made in ASEAN-EEC cooperation in insurance. After meetings between the ASEAN Insurance Commissioners and EEC officials, a comprehensive two-month attachment programme was arranged where 10 ASEAN insurance officials went to selected EEC countries to study their insurance supervision philosophies and techniques and insurance market structures. The programme was completed in April 1983. As a follow-up, the EEC is prepared to attach insurance experts to ASEAN countries in areas where such assistance would be useful. This has been targetted for late 1983 or early 1984.

Access to Capital Markets

In the important area of access to capital markets, the project document on "ASEAN Workshop on Access to Capital Markets" was formally concluded on 23 November 1982 between ASEAN-Thailand, on behalf of ASEAN, the UN Centre on Trans-national Corporations (UNCTC), the Executing Agency, and UNDP, the funding agency. The objective of such Workshops is to strengthen the capability of ASEAN countries to gain better access to the international markets, particularly in the U.S., Japan and West Asia.

The first of these, an "ASEAN High-Level Workshop on Negotiation with Transnational Banks" was held in Singapore from 29 November to 3 December 1982. The aim of this Workshop was to familiarise some 30 participating Central Bank and Ministry of Finance senior officials with the activities of transnational banks and to enhance the participants' skills for negotiating loan agreements and bond issues in the international capital markets.

The project document further envisaged three middle-level training workshops. The Eleventh COFAB Meeting has, however, decided that these be reduced to two.


Tax Matters

The ASEAN Working Group on Tax Matters (AWGTM) held its Second Meeting in Bali, Indonesia, on 6-9 December 1982. In preparing the groundwork for further cooperation, the AWGTM's discussions focused on the issues of transfer pricing and computerisation.

In the area of transfer pricing, the Second Meeting of the AWGTM, after a lengthy exchange of information on the practices in the respective countries, came to the following conclusions:
In the area of the computerisation of tax administration there was an intensive exchange of country experiences. On the basis of the information gained, the AWGTM agreed to further explore areas for fruitful cooperation in computerisation, including the need for a joint training programme.


Avoidance of Double Taxation

Since the Ninth meeting of COFAB in April 1982, ASEAN countries have made further progress in both the concluding and bringing into force of bilateral Agreements for the Avoidance of Double Taxation. The Malaysia/Thailand and Indonesia/Philippines Agreements are now both in force, The Philippines has also concluded/signed agreements with both Thailand and Malaysia, while negotiations between Indonesia and Malaysia have been initiated.

The matrix on the status of Agreements on the Avoidance of Double Taxation appears as below:

For more information, please refer to project details