Committee on Industry, Minerals and Energy


The Committee on Industry, Minerals and Energy (COIME) held three meetings in the period under review. The Eighteenth Meeting was held in Denpasar, Indonesia, on 25-27 August 1982, the Nineteenth Meeting in Singapore on 6-7 November 1982 and the Twentieth Meeting in Manila, Philippines, on 13-15 April 1983.

ASEAN Industrial Projects (AIP)


The year 1982-1983 was a mixed one for the Al P scheme. On the one hand both the ASEAN Urea Projects are well along the road and the day is fast approaching when the Indonesia-based Urea Project commences commercial production. On the other hand both the ASEAN Rock Salt-Soda Ash Project (Thailand) and the ASEAN Copper Fabrication Project (Philippines) have run into unexpected difficulties which have caused delay in their implementation. Further, despite continued efforts, Singapore has not so far been able to come up with an alternative AIP to its earlier Diesel Engine Project.

ASEAN commitment to industrial cooperation remains as strong as ever. It is evidenced by the willingness to, and innovativeness, in exploring other approaches to industrial cooperation such as, for example, the ASEAN Industrial Joint Venture (AIJV) scheme.

In view of the recent practical difficulties in the implementation of some AlPs, COIME decided to conduct a comprehensive review of the conceptual framework of AlPs. This is expected to include, inter alia, issues such as equity participation, market support, directional tariff and exclusivity.


ASEAN Urea Project (Indonesia)


As of February 1983, the overall progress of the Project was reported as 80.0% against a target of 85.9%. This was made up of progress on individual activities as follows: Engineering 100 per cent; Procurement 99.7 per cent; Shipment, 92 per cent; Plant Construction 74.6 per cent; and Harbour Construction 74.3 per cent.

Construction, both plant and harbour, had experienced certain difficulties. One of the critical areas in plant construction which had fallen below expectations was piping erection, especially with regard to the Ammonia Unit and the Urea Unit.

Personnel training had proceeded apace and the only area where there seemed need for improvement was the recruitment and training of craftsmen.

In spite of such difficulties, however, and the 5.9 per cent lag behind the targetted schedule, there is every expectation of completing the project by the end of December 1983, three months ahead of contracted schedule.


ASEAN Urea Project (Malaysia)


The Project was incorporated in Malaysia on 6 December 1980 as the ASEAN Bintulu Fertiliser Sdn, Bhd. (ABF). Based in Bintulu, Sarawak, it will, when on stream in 1985, have a production capacity of 1000 tons of ammonia per day and 1,500 tons of urea per day.

Site preparation for the Project started with the award of the contract to Taisei Corporation on 4 February 1982 and was completed by January 1983.

The Main Contract was awarded to Kobe Steel Ltd. (KSL) of Japan in consortium with Uhde GmbH of Germany on 9 July 1982 and on 1 8 January 1983 KSL took over the Project site. The sub-contract for erection work was awarded to Hyundai by KSL on 24 December 1982.

As of February 1982 site soil investigation by KSL was at the report writing stage, while the design of non-process building was virtually complete. Engineering design was proceeding under the review of ABF and its Technical Consultant, Stone and Webster Engineering Corporation, New York. Enquiries with regard to the procurement of equipment had also been initiated, though no orders had then been placed.


ASEAN Copper Fabrication Project (Philippines)


As of April 1983, the contract for engineering services for the Project had been concluded between ASEAN Philippines Copper Holdings, Inc., the holding company of the Philippine shares in the Project, and Sel trust Engineering Ltd. of the U.K. The agreed scope of engineering services includes basic engineering, preparation of invitations to bid and technical evaluation of bids. Invitations to bid (ITBs) for the wire rod plant, tube and extruded products plant, flat products plant, and common melting/casting plant, were being finalised, as of April 1983, for release in May 1983.

The Supplementary Agreement has now reached an advance stage of negotiation, and with the expected resolution of the issue concerning member country obligation for the 20,000 metric tons meant for non-ASEAN markets should such markets not materialise, as well as some agreement on the scope of "available ASEAN markets", matters should be finalised in the near future.


ASEAN Rock Salt-Soda Ash Project (Thailand)


The Project Company was incorporated under the name of ASEAN Soda Ash Company Ltd. on 25 June 1982, following which the Board of Directors of the Company held two meetings on 25 June and 6 August 1982.

UNICO International Corporation of Japan was selected as Project Management Consultant. Further progress on the Project, especially with regard to the commencement of loan negotiation, has however been delayed for two main reasons: first, the problem of finding the market for the excess of planned rock salt production of 1,8 million tons over the planned rock salt consumption of 560,00 tons by the soda-ash plant - i.e. some 1.2 million tons of rock salt; and second, the problem -with regard to the Thai private sector's request that the Thai Government increases its share of the Thai equity portion from one-third to 49 per cent.

With regard to markets for rock-salt, a study has subsequently shown that they are limited because of the high cost and slightly higher impurity of Thai salt compared to solar salt from Mexico and Australia. A further study has hence been commissioned to look into the feasibility of scaling down the capacity of the rock-salt mine in line with the requirements of the soda-ash plant, or to drop the rock-salt mine completely and purchase rock salt from local mines. Based on the result of the study, the Thai Government will also decide on the extent of its equity participation in the Project.


ASEAN Industrial Complementation


In order to expand the scope of the First Package of Existing Automotive Components, the Eighteenth COIME Meeting agreed that additional products may be included on the basis of submissions from the private sector. Based on such submissions and subsequent negotiations, the expanded product allocation as finalised by the Twentieth CO I M E Meeting was as follows:

 Indonesia 		 : Diesel engines(80-135 HP);
 			   motorcycles axles; wheel
			   rims for motorcycles
 Malaysia		 : Spokes and nipples; drive
 			   chains and timing chain
			   crown wheels and pinions; seat belts
 Philippinen		 : Body panels for passenge
			   car; transmissions/transaxles
			   (for front-wheel drive );
			   rear axles (LCV and below)
 Singapore		 : Universal joint; oil seals; V-belts

Thailand		 : Body panels for commercial
			   vehicles of one ton and
			   above; brake drums for
			   trucks; heavy duty shock
			   absorbers; stabilizers;
			   bumpers and trunnion brackets.
As agreed at the Eighteenth Meeting, such additions do not alter the implementation of the First Package with respect to products previously approved. The Twentieth meeting further agreed that the exclusivity. period for the First Package would be from 1 7 January 1982 to 16 January 1984, in accordance with the provisions of the BAAIC.

Pursuant to the decision of the Seventeenth COIME Meeting in May 1982 to defer the implementation of the Second Package pending an exploration, among other things, of the possibility of brand-to-brand complementation, the Fifth Meeting of the COIME Experts Group on the Automotive Industry in Denpasar, Indonesia, on 24 August 1982, held initial but extensive consultations with the representatives of leading Japanese car manufacturers in the ASEAN region or) the practical implementation of the idea. Firms represented were Toyota, Isuzu, Toyo Kogyo, Mitsubishi, Nissan, Honda and Ford (Japan). Following the consultations it was agreed that detailed proposals on the implementation of the brand-to-brand automotive complementation scheme be submitted by the Japanese manufacturers to ASEAN. The Experts Group also agreed to invite similar proposals from European and American manufacturers.

The initial proposals of Japanese car manufactuers were considered by the Experts Group at their Sixth Meeting in January 1983 and by the Twentieth COIME Meeting. On the basis of these proposals and further discussions involving the private sector, the terms of reference for brand-to-brand Complementation were finalised as a basis for the guidance of car manufacturers in coming up with more concrete proposals. As envisaged, the automotive. brand-to-brand complementation scheme would be implemented within the legal framework of the BAAIC and the PTA, though with added elements of flexibility. It is designed to cover passenger cars, commercial vehicles and two/three wheelers for both the original and replacement equipment market. Within the general objective of promoting an equitable distribution of trade benefits and technology among the participating countries over a period of time, complementation arrangements for the exchange of components of the same make of vehicles may be made between two or more member countries. It was also recommended that the brand-to-brand complementation programme should incorporate a programme of component export to the principal's manufacturing facilities in non-ASEAN countries in order to enhance the viability of manufacturing facilities in ASEAN.


ASEAN Industrial Joint Venture (AIJV)


The Basic Agreement on AIJV (BAAIJV) was finalised at the Nineteenth COIME Meeting and initialled by the AEM at their Fourteenth Meeting in Singapore on 11-1 3 November 1982 for formal signing by the Foreign Ministers. The preparatory work for the implementation of the scheme had already been launched. The AIJV scheme is, after the AIP and AIC schemes, the third major scheme of ASEAN industrial cooperation, The introduction of the AIJV scheme will mark yet another milestone in ASEAN industrial cooperation.

The BAAIJV is also a testament to the productive working relationship between the ASEAN Governments and the ASEAN private sector. As articulated in the preamble, the Agreement arose from a desire "to provide the guidelines and institutional framework within which the ASEAN Governmental machinery an the private sector -through the ASEAN-CCI may collaborate to identify opportunities, formulate programmes and design projects for pursuing joint- ventures on the basis of mutual and equitable benefits for the member countries and increased industrial production for the region as a whole."

Under the provisions of the BAAIJV a list of AIJV products shall be drawn up by COIME and approved by the AEM on the basis of submissions from the private sector through the ASEAN - CCI. Any two or more ASEAN member countries may be participating countries with respect to an AIJV product. An AIJV is an entity which :

(a) produces an AIJV product in any of the participating countries;

(b) has equity participation from nationals of at least two participating countries; and

(c) has a minimum ASEAN equity ownership of 51 per cent except in any of the following cases:

The investors in an AIJV shall be free to locate their projects in any of the participating countries - i.e. there is free project siting.

Participating countries in an AIJV product shall extend to such products of AIJVs in participating countries a minimum margin of tariff preferences of 50 per cent for a period of three years. At the end of the three-year period all ASEAN member countries are deemed to be participating countries, and the margin of tariff preference shall be extended to all entities in ASEAN producing AIJV products, irrespective of whether or not they qualify as AIJVs.

For new AIJV products - i.e. a product that is not being processed or manufactured in any of the participating countries at the time of its approval - for which there is only one approved project six months after the product has been approved, exclusivity privileges shall also be extended for a period of three years. Under the BAAIJV such exclusivity privileges mean that during the three year exclusivity period, the participating countries cannot set up production facilities for the same product, other than for the approved project, unless 75 per cent of its production is for export to non-ASEAN countries. This qualification is similar to that in the BAAIC.

With the initialling of the BAAIJV by the 14th AEM Meeting, the Twentieth COIME Meeting drew up various Rules and Regulations to implement the Basic Agreement.


Cooperation in Minerals


The COIME Experts Group on Minerals held its Third Meeting in Manila on I 0-1 1 May 1982 and its Fourth Meeting in Bangkok on 24-25 February 1983. These two meetings reviewed, refined and put on operational basis the various projects previously agreed upon.

With regard to the study on the Exploration, Beneficiation and Marketing of Kaolin, for which Indonesia is the project coordinator, an ASEAN Seminar on Kaolin was held in Bandung on 27-28 October 1 982 to draw up the terms of reference for such a study. As a result, four specific areas of activity were identified. These, were :

- Study on Marketing of Kaolin in ASEAN including, inter alia, standardisation of commercial specification of kaolin in production and consumption.

- Beneficiation of kaolin for high quality products (coating )

- Preparation of delineation maps of kaolin for specific uses

- Establishment of an Information Network System on kaolin.

As regards the project on the beneficiation of barite - i.e. raising the quality of low-grade barite, which is found in every ASEAN country except Singapore, through appropriate treatment/processing to make it suitable for the production of high quality products such as paint - the Experts Group agreed to extend the scope of the project to cover utilisation as well as marketing, with the initial emphasis placed on beneficiation and marketing.

It is expected that studies on the Kaolin and Barite Projects would soon be undertaken with financial assistance from the Australian Government.

Regarding the proposal on the establishment of an ASEAN Training Centre on Mine Safety and Health, this would be covered under the Study on the Feasibility of Establishing an ASEAN Training Centre on Mine Safety and Health, also to be undertaken with Australian financial assistance.

Besides the above, the Experts Group, with the endorsement of COIME, would also be embarking; inter alia, on the following :

- a project on Stability Problems in Open Mines in Soft Ground

- a project on uranium exploration in ASEAN countries

- a Regional Workshop on Some Aspects of Mineral Development in Southeast Asia.


ASEAN Cooperation on Coal

As a follow-up to the Second Meeting of the Experts Group on Coal, a meeting was held between the ASEAN Experts Group on Coal, ESCAP and the Asian Development Bank (ADB) in Bangkok on 13-14 August 1982 on the ASEAN Coal Study with Technical Assistance from the UNDP and the ADB. The Study will include supply and demand analysis, infrastructure development, establishment of the ASEAN Coal Information Centre and the acquisition of appropriate coal technologies. Details concerning the objectives, scope and terms of reference, project execution and the degree of involvement of the ASEAN Experts Group on Coal and the ASEAN Secretariat were discussed in greater detail in Manila in September 1 982. The cost of the study amounts to US$ 800,000 and will be borne by ADB, UNDP and ASEAN member countries.

Project Support Groups have been established in each member country and initial work on data compilation has begun to ensure that the project may proceed as early as May 1983.

The Study will be conducted by a consultant to be selected by ADB.


ASEAN Cooperation on Power Utilities/ Authorities

The Second Meeting of Heads of ASEAN Power Utilities/ Authorities was held in Kuala Lumpur, Malaysia on 14-1 5 January 1983.

Some of the important recommendations endorsed by the Second Meeting are :

  1. To establish an ASEAN Micro/Mini-Hydro information Exchange Systems;

  2. To continue with the Computer Applications Working Group's projects in hand, such as Transmission Planning Software, Security Level and Load Frequency Control;

  3. To continue with the 7 projects studies on Interconnection as agreed by the Working Group;

  4. To form a joint study on lightning and lightning outrage prevention under the Research, Development and Engineering Group;

  5. To develop management and technical training programmes;

  6. To embark on technical and non-technical cooperation in Geothermal Power Development;

  7. To hold a Nuclear Seminar /Workshop in March 1983

  8. To continue cooperation in Rural and Urban Electrification;

  9. To establish a common standard of certain equipment; and

  10. To produce a consolidated report of ASEAN electric power statistics by June 1983.