The Third Protocol to Amend the RBAAIJV has been signed on ad-referendum basis by the ASEAN Foreign Ministers. The effective date of the Protocol is 2 March1995.
A Protocol to amend the Memorandum of Understanding on Brand-to-Brand Complementation on the Automotive Industry under the Basic Agreement on ASEAN Industrial Complementation (BAAIC) to allow the participation of Indonesia was also initialled by the ASEAN Economic Ministers in Chiangmai and signed by the ASEAN Foreign Ministers on ad referendum basis. The Protocol became effective as of 2 March 1995.
Recognizing the significant difference in the economic environment at the time, various ASEAN industrial cooperation programmes were established and at the present, the ASEAN Economic Ministers endorsed SEOM's recommendation to establish the Working Group on Industrial Cooperation (WGIC) to review all existing ASEAN industrial and trading arrangements. While the WGIC was undertaking the review, the Ministers, at the AEM Retreat in April 1995 in Phuket, decided to phase out the AIJV and BBC Scheme. The Ministers also requested SEOM to look into other activities or schemes to accelerate industrial cooperation.
The ASEAN Federation of Textile Industries (AFTEX) has proposed that the Rules of Origin of the CEPT Scheme be amended to assist in the promotion of intra- ASEAN trade in textile and textile products. The Federation contended that in view of the high non-ASEAN materials used in the manufacture of textiles and textile products, its members will not be able to meet the percentage criterion of the CEPT Rules of Origin. AFTEX proposed that the substantial transformation process criterion be applied for textile and textile products. The Fifth AFTA Council Meeting, has accepted the proposal in principle and requested SEOM to consider the matter. A joint SEOM- AFTEX Working Group has been established by SEOM and met on 24 November 1994 to discuss the matter further. In view of the highly technical nature of the subject matter, the Working Group met again on 22 April 1995 to further deliberate on the proposed CEPT Rules of Origin for Textile and Textile Products.
There was no consensus at the Second joint SEOM-AFTEX Working Group that substantial transformation process could be applied singly to textile and textile products. The Sixth AFTA Council decided that the substantial transformation process could be applied concurrently with the percentage criterion of the present CEPT rules subject to confirmation from the Philippines and Indonesia.
The significance of the AFTEX proposal is not only in terms of a more active private sector participation in ASEAN affairs, but more importantly it also reflects a shift in the outlook of ASEAN textiles and textile products manufacturers. Traditionally, the ASEAN textile trade has been focussed mainly on meeting the needs of the market of the developed countries. Their marketing strategy and production capacity has been geared towards these countries taking ,advantage of the lucrative quota market. While it 'Is not expected that there would be a major diversion from the present trade pattern, the ASEAN textiles and textile product manufacturers are now giving due consideration to the ASEAN market in their trade matrix.
Investment
Although the First Consultative Meeting for the Promotion of Foreign Direct Investment in ASEAN countries was held from 8 to 9 February 1993 in Jakarta, no formal ASEAN body has been established to pursue this area of cooperation. SEOM has now agreed to establish a Working Group on the Promotion of Foreign Direct Investment. The terms of reference f the Working Group include the formulation of an ASEAN Agreement on Investment Cooperation and Promotion and an ASEAN Plan of Action for the Implementation of the Agreement on Investment Cooperation and Promotion.
Small and Medium Scale Enterprises
A new area of ASEAN cooperation is being considered. SEOM has endorsed the proposal to pursue a Plan of Action on Small and Medium Scale Enterprises (SMEs) Development. The objective of this proposal is to pool ASEAN resources to facilitate the modernization of the SMEs. Towards this end , the fist consultative meeting between ASEAN SME Agencies was held on 24 April 1995 in Jakarta, The meeting deliberated on the Plan of Action of ASEAN SME development and charted ASEAN cooperation in this important area. Since this is the first attempt at developing ASEAN cooperation in SMEs, identification of national SME focal points and exchange of information was the main focus of the meeting. A networking arrangement has been agreed to between the national SME focal points with the ASEAN Secretariat functioning as the regional coordinating body and the central clearing house of SME information.
For a start, the First Meeting of ASEAN SME Agencies agreed to work towards the implementation of an action agenda. The Action Agenda shall focus on export- oriented manufacturing and agro-based SMEs. It as also agreed that for a more effective and coordinated ASEAN participation in the APEC SME activities, the Meeting of ASEAN SME Agencies shall serve as the ASEAN coordinating forum.
Private Sector Participation
The main channel of private sector participation in ASEAN rests with the ASEAN-CCI. Similarly, the main channel of communication between ASEAN and the private sector is through the ASEAN-CCI. The ASEAN-CCI representation during SEOM and AEM meetings has been extended even to the working group level. During the SEOM Preparatory Meeting for the Twenty-Sixth AEM, SEOM stressed that the present relationship between SEOM and ASEAN-CCI offers few or no benefits to both parties. The interaction between SEOM and the ASEAN-CCI is insufficient. SEOM and indeed the AEM, is looking for a more substantial contribution from the ASEAN- CCI on a wider spectrum of issues.
The ASEAN-CCI is currently undertaking a self-restructuring process to make the organization a more effective voice of the private sector in ASEAN. The ASEAN-CCI has to reestablish its credibility among its members as an organization that can represent their interest to the ASEAN governments. To assist the ASEAN-CCI, the ASEAN Secretary-General has offered a space in the Secretariat as the permanent site of the ASEAN-CCI Secretariat. The present roving secretariat of the ASEAN-CCI was cited to be one of the problems in preventing the organization from discharging its functions effectively. By locating the ASEAN-CCI permanently at the ASEAN Secretariat, this will help solve the problem of communications and coordination between the two organizations.
With a view to encouraging more private sector participation in ASEAN activities, SEOM has agreed that representatives of the ASEAN-CCI be invited to all its meetings as well as those of the working groups where appropriate.