The Twelfth Meeting of the Committee on Finance and Banking (COFAB) was held in Bangkok in March 1984. The highlights of COFAB activities are summarized hereunder:
Measures to promote intra-ASEAN Trade and Investment
ASEAN Export-Import Bank
As a measure to encourage intra-ASEAN trade and investment, a fact-finding mission to ASEAN member countries was undertaken in 1980 by the International Finance Corporation (IFC) to determine the feasibility and desirability of creating an ASEAN Export-Import Bank. The mission was of the view that export credit facilities were adequate at that time and that there was no need to set up such bank. However, during its Twelfth Meeting, COFAB re-examined the matter and agreed to request the IFC to conduct a fresh study.
ASEAN Bankers Acceptance
The proposal to establish an ASEAN Bankers Acceptance (ABA) Scheme has been considered by COFAB and the ASEAN private sector. At its Thirteenth Meeting in June 1983, the ASEAN Banking Council (ABC) decided to request the ASEAN Finance Corporation (AFC) to start the ABA scheme on a trial basis between Thailand and Indonesia so as to ascertain the commercial viability of the scheme. An initial S$6 million was raised by AFC in Malaysia and Singapore for discounting to banks in Thailand and Indonesia with AFC as the acceptor. Based on the operational experience, the ABC subsequently took the following measures to help create the market: (a) to request the AFC to approach the major banks in ASEAN member countries to establish credit lines for ABAs; (b) shorter tenure papers such as 30-day maturity be offered, in addition to the present longer maturity papers. The viability of the scheme has yet to be tested.
Customs Matters
The ASEAN Working Group on Customs Matters (AWGCM) held its Seventh Meeting in Kuala Lumpur in February/March 1984, and considered follow-up action on proposals made by an ASEAN Customs Study Tour in 1981. The AWGCM agreed to continue to update information on existing practices in the field of prevention, investigation and repression of customs offences and drug trafficking, and exchange updated information in the field of customs import and export procedures, Furthermore, the feasibility study on standardization of customs declaration forms was extended to include the Air Passenger Baggage Declaration and all other ASEAN customs declaration forms as well.
Regarding the project proposal for the establishment of an ASEAN Customs Institute for Training and Research (ACITAR) with EC funding, the EC Commission at the Fourth ASEAN-EC Joint Cooperation Committee Meeting in October 1983 expressed interest in extending technical assistance for the project.
Insurance Matters
Indonesia hosted the Ninth Meeting of the ASEAN Insurance Commissioners (AICS) in Bali in September 1983. At the Meeting, the Insurance Commissioners agreed to continue working towards harmonizing insurance laws in the ASEAN region, including measures to relax legal barriers hindering the free flow of insurance business within the region and the harmonization of life insurance policy provisions; to undertake annual surveys on insurance business in the region based on insurance information collected under the unified form of insurance statistics; to exchange information on off-shore brokers which engage in activities, detrimental to the orderly development of insurance business within the region; and to continue to pursue cooperation in insurance with Australia, the European Community, Japan and the United States.
The Insurance Commissioners also pledged firm support for the industry-based ASEAN Insurance Council in its efforts to promote insurance cooperation in the private sector. The Commissioners urged the private sector in member countries to increase participation in the Council's
ASEAN Reinsurance Pool. The Commissioners also agreed to support the Council's proposal to establish an ASEAN Insurance College which would help meet ASEAN's need for professionally trained personnel in insurance.
The EC agreed to attach insurance experts to ASEAN countries in the areas of supervision of reinsurance arrangements, fire insurance rating, marine insurance and life insurance. The attachment is expected to take place in the second half of 1984.
Progress was also made in insurance cooperation with the US. At the Fifth ASEAN - US Dialogue in December 1983, ASEAN put forward proposals for insurance cooperation in the following areas: the development of contacts and cooperative schemes with the US National Association of Insurance Commissioners, technical expertise on loss prevention measures and crop insurance. The US has agreed to these areas for cooperation. It has also indicated that the US - ASEAN Centre for Technology Exchange in Washington DC will consider including insurance cooperation as one of its programme areas.
On insurance cooperation with Japan, the ASEAN Insurance Commissioners agreed that they should establish formal contacts with their Japanese counterpart while the ASEAN Insurance Council should pursue cooperation in the private sector through contacts with the Insurance Association of Japan.
Access to Capital Markets
Access to capital markets received high priority in ASEAN. The project document on "ASEAN Workshop on Access to Capital Markets Phase II" was formally concluded in February 1984 between ASEAN, the UN Centre on Transnational Corporations (UNCTC), the executing agency, and the UNDP, the funding agency.
A middle level workshop was held in Chiang Mai, Thailand in March 1984. Another one will be held in Kuala Lumpur in July 1984. The objective of the workshop was to enhance the skill of ASEAN officials in negotiating loan agreements in the international capital markets. It also provided a forum where officials from banking institutions in both lending and borrowing countries reviewed the problems arising in loan negotiations.
The Third Seminar on Access to European, Capital Markets was held in London in March 1984 with EC financing for 20 ASEAN participants.
ASEAN Financial and Banking System: Structure and Prospects
In order to further identify possible areas of financial cooperation, the survey which had been proposed by Thammasat University, Bangkok on the existing differences and similarities of the financial structure, policy, regulations and needs among the ASEAN countries by a group of ASEAN experts was conducted in June 1984 with UNDP's funding.
Tax Matters
A number of project proposals in the area of tax matters were presented at the various dialogue meetings. They were Technical Assistance in Computerization for Tax Administration Operation; Audit of Accounting Records of Business Organizations; and the Establishment of an Information and Research Centre for ASEAN - EEC Taxation. These proposals are being processed between ASEAN and the respective dialogue partners.
Avoidance of Double Taxation
ASEAN countries have made further progress in concluding and/or implementing bilateral agreements on the avoidance of double taxation. During the year, the Philippines-Thailand Agreement entered into force. Indonesia and Malaysia had initialled their agreement. Indonesia and Singapore have also initiated their agreement. It is expected that negotiations with Brunei Darussalam will take place in due course.
The matrix on the status of agreements on the dance of double taxation appears in the next page.
For more information, please refer to the project details
