COOPERATION IN INVESTMENT

According to the 1996 World Investment Report, foreign direct investment (FDI) inflows to five ASEAN countries (excluding Brunei and Vietnam) increased from US$11.9 billion in 1990 to US$ 19.6 billion in 1995. In an effort to further increase investments to ASEAN, the ASEAN Heads of Investment Agencies (AHIA) met three times to discuss various aspects of investment cooperation matters. The AHIA at their Shah Alam Meeting in July 1996 agreed to establish a Senior Officials' Meeting on Investments (SOM-I) to assist them in handling regional investment matters. The First Meeting of SOM-I took place in 5 September 1996 in Jakarta.

Prior to the establishment of the SOM-I, ASEAN cooperation in investment came under the purview of the Working Group on Investment Cooperation and Promotion (WGICP). This group met four times and discussed a number of regional cooperation projects pertaining to investment.

The frequency of investment meetings and activities gives evidence to the increasing importance placed by ASEAN Member Countries on investment matters. In addition to the convening of investment-related activities, a work programme of 32 regional investment activities has been adopted in order to implement the Plan of Action on Cooperation and Promotion of Foreign Direct Investment and Intra-ASEAN Investment. The activities included among others, joint promotion events, publication of investment regulations, joint training programmes for investment officials in ASEAN, the promotion of FDI by SMEs and facilitation programmes to establish a conducive investment environment for hightech and high value-added-oriented investment operations.

Another significant achievement was the Signing of the Protocol amending the 1987 ASEAN Agreement for the Promotion and Protection of Investments at the 28th ASEAN Economic Ministerial Meeting in Jakarta in September 1996. The updating of the 1987 Agreement involves the inclusion of four main provisions on transparency and predictability; simplification of investment procedures and approval process; a dispute settlement mechanism; and accession of new members. The Protocol and the 1987 Agreement will undoubtedly increase the confidence of prospective and current investors in the region.

Following the decision made at the 5th Bangkok Summit to establish a bold and broad-based regional initiative which would push ASEAN's prominence as a competitive and conducive investment environment, the AEM Retreat held in Singapore in early 1996, agreed that the regional initiative should be called the ASEAN Investment Area (AIA). Efforts in formulating the appropriate framework and strategies to realise the concept of AIA are currently being studied by the officials.

The AIA will be a synergistic and strategic alliance among ASEAN Member Countries. The diversity of ASEAN Member Countries will provide plenty of complementary advantages for investors to exploit. The AIA will give impetus to investors to think ASEAN and to adopt a regional business strategy and network of operations and enable ASEAN to attract greater and sustainable levels of FDI flows.