1. The ASEAN Economic (AEM) and Investment (AIA) Ministers jointly held their Retreat in Sentosa, Singapore on 21 April 2004 to review the progress made in the implementation of various initiatives mandated by the Leaders to move towards the ASEAN Economic Community. The Ministers were generally pleased with the progress made in the implementation of these initiatives.
Priority Integration Sectors
2. The Ministers noted that the Country Coordinators for the 11 priority sectors have submitted their draft roadmaps for the integration of their respective sectors. The ASEAN Secretariat has likewise submitted the draft roadmap for the horizontal issues that cut across all the 11 sectors. The Ministers tasked the Senior Officials (SEOM) to negotiate and finalize the all the roadmaps for endorsement of the Ministers in September 2004. The 10th ASEAN Summit has been targeted for the signing of the legally-binding agreements to implement the measures to integrate the 11 priority sectors. The Ministers endorsed a general approach for the negotiations and finalization of the roadmaps.
3. The 11 priority integration sectors and their respective Country Coordinators are as follows:
(i) Indonesia: wood-based and automotive products;
(ii) Malaysia: rubber-based products, and textiles and apparels;
(iii) Myanmar: agro-based products and fisheries;
(iv) The Philippines: electronics;
(v) Singapore: e-ASEAN and healthcare;
(vi) Thailand: air travel and tourism.
ASEAN Investment Area
4. The Ministers noted that, against an improved economic situation and investment climate, FDI flows to the region increased by 52.4%, from $12.4 billion in 2002 to $18.9 billion in 2003 which confirmed that SARS had not affected FDI flows to the region. The Ministers are upbeat on the prospects for higher FDI flows to the region in 2004 given the continued global and regional economic growth, improved corporate profitability and the stronger regional integration process that are being witnessed.
5. The Ministers also noted with satisfaction that member countries have taken steps to introduce individual policy measures to improve their investment climates. Such measures include signing of bilateral investment treaties, double taxation agreements, further opening-up of sectors for FDI, strengthening institutional arrangement to facilitate investment process, relaxation of equity ownership, simplification of investment procedures and provision of incentives.
6. The Ministers agreed that the scope of the AIA Agreement include services incidental to manufacturing and those services under the 11 priority sectors (i.e. tourism, air travel, e-ASEAN and healthcare).
7. The Ministers noted the progress made by the senior investment officials in drafting a strategic action plan to strengthen the AIA process and improve the region’s competitiveness in attracting FDI. The strategic action plan would be finalized at the 7th AIA Council Meeting in mid-2004 in Indonesia.
Dispute Settlement Mechanism
8. The Ministers were briefed on the developments in putting in place the enhanced dispute settlement procedures in ASEAN following the mandate of the Leaders under the Bali Concord II. They noted in particular the progress made in amending the Protocol on the ASEAN Dispute Settlement Mechanism.
9. As another milestone in the enhanced ASEAN dispute settlement procedures, the Ministers endorsed the Terms of Reference to establish the ASEAN Compliance Body (ACB). The ACB, which was patterned after the Textile Monitoring Body of the WTO, is intended to offer a consultative mechanism making use of peer adjudication for a less legalistic and speedier resolution of disputes.
ASEAN External Economic Relations
10. The Ministers were briefed on the progress made on ASEAN negotiations for FTAs (free trade arrangements) and CEPs (closer economic partnerships) with Dialogue Partners. The Ministers noted the developments and provided guidance to the various Committees undertaking these negotiations.
11. The Ministers also reviewed the current AFTA-CER Linkage and expressed the view that it would be beneficial to both regions to upgrade economic relations to the next level. In line with this, the Ministers supported the possibility of convening an ASEAN-CER Commemorative Summit in Vientiane in November 2004. The Ministers also tasked the ACCICG (AFTA-CER CEP Implementation and Coordination Group) and the Senior Officials to study the future direction of the AFTA-CER Linkage, including the possible launching of an ASEAN-CER Free Trade Area at the Commemorative Summit.
ASEAN Industrial Cooperation Scheme (AICO)
12. The Ministers signed the Protocol to Amend the Basic Agreement on the ASEAN Industrial Cooperation Scheme (AICO) to maintain the relevance of the AICO Scheme until 2010.
13. Introduced since 1996, the ASEAN Industrial Cooperation (AICO) Scheme aims to promote resource-sharing and to increase the competitive position of ASEAN’s manufacturing industries by means of production integration across borders facilitated by a tariff preferential rates. The Protocol provided for new preferential tariff rates to be given to new approved AICO projects: zero percent for Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia and Singapore; 0-1 percent for the Philippines; 0-3 percent for Thailand; and maximum of 5 percent for Myanmar and Vietnam.
14. As of 20 January 2004, 172 applications were received, of which 118 application have been approved. Based on the data provided at the time of application, these approved AICO arrangements are expected to generate an estimated value of US$ 1,236 million of transactions per year.
Summary of AICO Application Status
(as of 20 January 2004)
Total Number of Application
Total Number of Approved Application
Estimated Value of Transaction per year
LIST OF ASEAN ECONOMIC AND INVESTMENT MINISTERS
(i) H.E. Pehin Dato’ Abdul Rahman Taib, Minister of Industry and Primary Resources, Brunei Darussalam
(ii) H.E. Mr. Cham Prasidh, Minister of Commerce, Cambodia – Chairman AEM
(iii) H.E. Kong Vibol, Vice Chairman of Council for the Development of Cambodia and Secretary of State, Cambodia – Chairman of the AIA Council
(iv) H.E. Ms. Rini M.S. Soewandi, Minister of Industry and Trade, Indonesia (represented by: Dr. Pos Hutabarat, Director-General, Ministry of Industry and Trade, Indonesia);
(v) H.E. Mr. Soulivong Daravong, Minister of Commerce, Lao PDR;
(vi) H.E. Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry, Malaysia;
(vii) H.E. U Tin Winn, Minister for Economic Cooperation, Myanmar;
(viii) H.E. Mr. Cesar V. Purisima, Secretary of Trade and Industry, the Philippines;
(ix) H.E. B.G. (NS) George Yeo, Minister for Trade and Industry, Singapore;
(x) H.E. Mr. Wattana Muangsook, Minister of Commerce, Thailand;
(xi) H.E. Mr. Truong Dinh Tuyen, Minister of Trade, Viet Nam;
(xii) H.E. Mr. Tran Dinh Khien, Vice Minister of Planning and Investment, Viet Nam
(xiii) H.E. Mr. Ong Keng Yong, Secretary-General of ASEAN.