SOMETHING NEW ABOUT ASEAN

[moe@xxxxxxxxxxxxx]

Something new about ASEAN [Business Times Oct'98]
Accord to spur greater investment flows signed 

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>From Al Labita in Manila 
Move will allow foreign investors same privileges as indigenous firms 

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ASEAN economic ministers yesterday sealed a Singapore-initiated framework
agreement to spur greater investment flows from within and outside the region. 

Called the Asean Investment Area (AIA), the landmark accord seeks to make
the region the "most attractive" for foreign direct investments (FDIs). 

Singapore's Prime Minister Goh Chok Tong first mooted the AIA during the 5th
Asean summit in Bangkok in 1995. 

The agreement, meant to sharpen Asean's competitiveness to woo more FDIs,
covers all industries but excludes portfolio investments. It will extend
national treatment to Asean investors by 2010 and those outside the region
by 2020, in line with Asean Vision 2020 which espouses the free flow of
investments. 

This means that subject to certain conditions, any foreign investor in a
host country will enjoy the same privileges as the indigenous companies. Any
preferential treatment granted will be on a most favoured nation basis. 

Both the granting of national treatment and the opening up of industries
will begin immediately upon AIA's ratification by Asean member-states which
is six months after yesterday's signing. 

The framework agreement called for the Asean economic ministers to establish
an AIA council composed of officials responsible for investments and the
Jakarta-based Asean secretary-general. The council's task is supervising,
coordinating and reviewing the AIA's implementation. 

In approving the AIA, the Asean economic ministers hope to progressively
reduce or eliminate government regulations that impede investments in the
region. 

The agreement requires Asean members to submit their temporary exclusion and
sensitive lists, if any, within six months after the AIA's signing. 

The lists refer to certain industries any Asean member may be unable to open
up to foreign investors under the national treatment clause. 

However, the temporary exclusion list will be reviewed every two years and
will be progressively phased out by 2010 by Asean countries, except new
members Vietnam, Laos and Myanmar. 

Vietnam has committed to scrap the temporary exclusion list by 2013, while
Laos and Myanmar, 2015. The sensitive list will be reviewed on Jan 1, 2003
and at such subsequent periodic intervals as may be decided by the AIA council. 

Asean members must inform the AIA council about all measures, laws,
regulations and administrative guidelines that affect the agreement. Such
provision, however, does not apply to confidential information meant for law
enforcement purposes and legitimate commercial interests. 

If compliance with the AIA results in serious injury and threat, an Asean
member may resort to emergency safeguard measures under the council's guidance. 

It may also adopt restrictions on certain investments if these give rise to
serious balance of payments problems and external financial difficulties. 


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