Press Release of the ASEAN Liberalizes Investment Rules Jakarta

JAKARTA, 31 Jan. – Member states of the Association of Southeast Asian Nations have decided early this week to accelerate the liberalization of their investment regimes by broadening the scope of economic activities where ASEAN investors are welcome and given national treatment.

Meeting in Jakarta on 27-28 January 2003, the ASEAN Coordinating Committee on Investment agreed to phase out the so-called “temporary exclusion list” of products in the manufacturing sectors in Brunei Darussalam, Indonesia, Myanmar, Philippines, and Thailand.  Malaysia and Singapore have no temporary exclusion list.  This means that, with effect from the first of January, any ASEAN investor can now invest in any ASEAN country and enjoy national investor treatment in the manufacturing sector, including in those areas that have been previously excluded.

This week’s decision has stepped up the timetable for investment liberalization, which was originally set four years ago.  Since the launch of the ASEAN Investment Area in 1998, Southeast Asian states have started opening up all industries for investment and grant national treatment to ASEAN investors, with some exceptions as specified in the Temporary Exclusion List and the Sensitive List.  These lists were supposed to be phased out by 2010 for ASEAN investors and by 2020 for all other investors.

The establishment of the ASEAN Investment Area is expected to encourage investors to think increasingly in the regional terms and adopt a regional investment strategy and network of operations.  The scheme aims to promote a more efficient division of labour and industrial activities across the region, creating opportunities for greater industrial productivity and cost competitiveness.

     An ASEAN investor is defined as being equal to a national investor in terms of the equity requirements of an ASEAN country in which the investment is made.  Thus, an ASEAN firm with a majority interest can avail itself of national treatment and investment market access privileges.

            The newer members of ASEAN, namely Cambodia, Laos and Viet Nam have until 1 January 2010 to phase out their temporary exclusion list for the manufacturing sector.

 Newly-opened manufacturing areas for ASEAN investors

 Brunei              : Manufacture of veneer sheets, plywood, laminboard, particle board,

                          other panels and boards, and builders’ carpentry

 Indonesia         : Manufacture of pesticides

 Myanmar         : Manufacture of pulp of all kinds, production and marketing of basic

                         construction materials, furniture, parquet, etc. using teak extracted

                         and sold by the State-owned economic enterprises.

 Philippines       :


Description of Treatment

Availment of Investment Incentives

For companies registered under the Omnibus Investment Code (E.O. 226) with more than 40% foreign equity:

    (a)Domestic market enterprises

– the project must be classified as pioneer

    (b)Export-oriented enterprises

– at least 70% of total production output must be exported.

Export Requirement

A company with more than 40% foreign equity must export at least 70% of its total production output to qualify for BOI registration and be entitled to incentives under the Omnibus Investment Code.

 Thailand            : Production of flour from rice and field crop