International Debt Issues

Recognizing the seriousness of the debt problems in developing countries, COFAB recommended the following ASEAN positions for the long term solution of debt problems:

(i) To support the proposal of the U.S. Treasury Secretary James A. Baker I II on the international debt strategy as a positive step in the right direction whereby debtor countries need to pursue correct and comprehensive macroeconomic adjustment policies with flexibility and practicability, and express concern that the new funds to be injected under the Baker Plan might not be adequate to meet the requirements of those developing countries which are in grave economic difficulties.

(ii) To support the policy to promote sustained economic growth in developed countries and strengthening of the global economic environment in order to facilitate policy reform and economic adjustment in the debtor countries;

(iii) To stress the continued need for adequate and timely financial flows from commercial banks, official lenders, and multilateral financial institutions; and

(iv) To work towards a more open and liberal global trading system.

Following the monetary crisis that began during the 1960s and became acute towards the end of the 1970s, the international community was confronted with the urgent need to reform the international monetary system. COFAB realized the importance of an active and effective participation by the developing countries in the reform planning and process, in achieving common objectives. Therefore, COFAB at its Fourteenth Meeting considered the matter and agreed on the following future course of action for improvements of the international monetary system.

(i) The need for more stability in the exchange rate system;

(ii) Symmetry in the international adjustment process and in multilateral surveillance as conducted through the International Monetary Fund (IMF);

(iii) The need for adequate and urgent Special Drawing Rights (SDR) allocation for the economically depressed developing countries.

(iv) A more active and positive role of the IMF in providing financial assistance to facilitate balance of payments adjustments of member states. In this connection, the Fund's conditionality must be flexible and take into account the various institutional and structural realities in the member countries.

(v) A more open and liberal global trading system; and

(vi) Steady increase in the transfer of real financial resources to developing countries.

The ASEAN Working Group on Customs Matters (AWGCM) continued its work in updating information on existing practices in the field of prevention, investigation and repression of customs offences and those involving drug trafficking. Information exchanges on customs import and export procedures and drawback and warehousing also continued with the view to improving national procedures in each member country.

The study on the standardization and harmonization of an Air Passenger Baggage Declaration Form for ASEAN was completed. The standard ASEAN model form for Passenger's Declaration was adopted by member countries which require written a declaration from air travellers.

The AWGCM agreed to undertake further studies on possible standardization and harmonization of the import, export and transit declaration forms as well. A study on the feasibility of the establishment of the ASEAN Customs Institute for Training and Research (ACITAR) continued.

Cooperation in Insurance

The ASEAN Insurance Commisioners (AICS) at their Eleventh Meeting in October 1985 in Manila, reviewed the progress in the implementation of the various recommendations made at the last meeting and expressed satisfaction that further progress had been made in ASEAN regional cooperation in insurance, notably in the areas of unified forms of insurance statistics, insurance education and training of insurance supervisory staff.

The AICs also agreed to continue to support the projects undertaken by the ASEAN Insurance Council, an NGO affiliated to ASEAN, especially the ASEAN Reinsurance Pool and the ASEAN Insurance College.

The AICs also agreed on the following:

i. to continue with the updating of the comparative study of ASEAN insurance laws as useful reference for member countries;

ii. to work jointly and coordinate with the ASEAN Insurance Council through their respective committee on the project of harmonization of ASEAN insurance regulations;

iii. to endorse the publication of standard life tables based on the experience of the relevant life insurance industry resulting from regional mortality studies on assured lives;

iv. to pursue cooperation with the United States and Japan in the field of insurance at govern mental level and to continue to support private sector cooperation in insurance and

v. to pursue cooperation with UN DP and review areas of future cooperation in insurance with the EEC.

Cooperation in Tax Matters

The ASEAN working Group on Tax Matters (AWGTM) agreed to exchange information and experience on bilateral tax treaties concluded with non-ASEAN countries on an informal basis. The AWGTM also agreed to set up an ad-hoc committee to undertake the study on the harmonization of tax treaties and to draft a model for treaty negotiations within ASEAN and with non-ASEAN countries. The AWGTM also continued its work on the computerization for tax administration and transfer pricing practices. National experiences in the investigations of transfer pricing practices in the automobile industry were shared among ASEAN member countries.

Member countries also exchanged views on the status of their avoidance of double taxation agreements with other countries.

Avoidance of Double Taxation

During the year under review, ASEAN further progressed in negotiations for bilateral agreements among member countries on the avoidance of double taxation. The first round of negotiations between Singapore and Indonesia since the exploratory talks in 1973 was held in November 1984, The second round of similar negotiations between Singapore and Brunei Darussalam took place in September 1985.

Status of the Agreements on the Avoidance of Double Taxation among ASEAN countries is shown on the next page.