Joint Press Statement
Third Meeting of the ASEAN Investment Area (AIA) Council
4 October 2000, Chiang Mai, Thailand

1.     Since the last meeting of the AIA Council in September 1969, ASEAN member Countries have staged strong economic recovery from the regional economic and financial crisis. There has been overall improvement in macroeconomic stability as evidenced from basic economic indicators of Member Countries. The Council is confident that ASEAN Member Countries will soon revert    to their original levels of dynamic growth and development before the crisis and that investor confidence to the region will increase.

2.    The Council expressed satisfaction with the substantial progress made in the implementation of the investment work programme and related activities, under the AIA process, to increase direct investment flows in the region.  The deliverables for the year include:

• Implementation of the joint investment promotion seminars in Japan in February and the investment promotion missions to the USA and Europe in May 2000. The series of ASEAN joint investment missions were successfully conducted in these major FDI source countries.
  
• Completion of regional publications (Investing in ASEAN – A Guide for Foreign Investors, ASEAN Investment Report 1999: Trends and Developments in Foreign Direct Investment in ASEAN, ASEAN Investment Map, AIA Series: Sensitive Lists and Temporary Exclusion Lists for Manufacturing Sector, Statistics of Foreign Direct Investment in ASEAN) to enhance transparency of Member Countries' investment regimes and increase awareness of investors on investment opportunities, incentives, policies and facilities in ASEAN.
  
• Completion by Member Countries of their negative lists (Temporary Exclusion List and Sensitive List) for Agriculture, Fishery, Forestry and Mining sectors which are now available to the public.

• Completion by Member Countries of their Individual Action Plans to implement the facilitation, promotion and liberalisation programmes of the AIA Agreement which will be made available to the public shortly.

• Development of comparable and comprehensive statistics on foreign direct investment flows into ASEAN with extended FDI data set, which will be soon released to the public.

• Implementation of a series of human resource development programmes and workshops for investment promotion officials from investment promotion agencies of ASEAN, especially for the newer Member Countries.

• A protocol improving and extending the AIA Agreement has been completed.

3.     The Council agreed that the Member Countries will continue to actively implement programmes and measures, both individually and collectively, to contribute towards achieving the AIA objectives and to make ASEAN a competitive investment location. These include, among others:  

• Developing an ASEAN Investment Portal - a new initiative to facilitate investment flow by providing a gateway linking ASEAN to the world.

• Engaging ASEAN and non-ASEAN business organizations in annual dialogue fora with the Council to enhance the involvement of the business sector in the AIA process;

• Launching of new regional investment publications to enhance transparency and greater awareness of the region's investment environment to investors (Facts and Figures, Cost of Investing and Doing Business in ASEAN, Statistics of Foreign Direct Investment in ASEAN - extended data set, ASEAN Investment Report 2000);

• Convening of joint investment promotion mission to Japan on 24 - 25 October 2000 by the Heads of ASEAN investment agencies. The Council noted that increasingly more and more investors are regarding ASEAN as an investment region and as such, regional promotional efforts would have to be enhanced;

• Further developing of the ASEAN Supporting Industry Database (ASID) to facilitate the growth of the supporting industries in the region;

• Developing measures to capture data on cross-border mergers, and acquisitions (M&As) in the region in view of the increasingly significant role of cross-border M&As as a source of FDI; and

• Regularly updating the Compendium of ASEAN Investment Policies and Measures for public use and to enhance transparency.

4.     FDI flows into ASEAN in all sectors in 1999 remain at high level, albeit declining, from US$ 19.6 billion in 1998 to US$16.9 billion in 1999. The decline was attributed to lower outflows of investment from some of the ASEAN's main sources of FDI due to economic situation specific to these countries. In particular, FDI from Japan, ROK and intra-ASEAN investments have declined. The "time-lag effect" of the financial crisis and the weakened corporate sector in ASEAN have been the main reasons for the significant decline in the intra-regional investments. About 76% of FDI in ASEAN comes from 5 major sources (ANNEX A) and these Are: Japan, EU, US, Asian Newly Industrialising Economies and Intra-ASEAN.

5.     The Council, however, noted that data from the US Department of commerce reveals that US FDI into ASEAN in 1999 has increased significantly to US$ 9.4 billion from US$1,1 billion in 1998 (ANNEX B). The large increase in US FDI in the region probably relates to increase in the financing of FDI projects through reinvestment earnings and cross-border mergers and acquisitions. FDI from EU increased by 8% from US$4.3 billion in 1998 to US$ 4.7 billon in 1999 (ANNEX C). In addition, ASEAN received an increase in a approved Taiwan investment in 1999 in terms of share and absolute figure (ANNEX D). The US data further underscores that ASEAN is one of the most profitable FDI locations in the world (ANNEX E).

6.     The Council noted the result of a study conducted by the institute of Southeast Asian Studies on the effectiveness of investment incentives in ASEAN in attracting FDI flows, which was commissioned by the ASEAN Secretariat. The study reveals that investors regard investment incentive, in particular fiscal incentives, as an important factor influencing their location choice. A majority of the participants in the survey further indicated that if incentives were taken away they would carefully reconsider their operation in ASEAN. The study further reveals the situation in which incentives can be more effective at attracting FDI flows into the region. For instance, incentive would be more important for efficiency seeking or cost-oriented FDI activities than would be for market-oriented FDI projects.

7. The Third AIA Council Meeting was chaired by H.E. Abhisit Vejjajiva,

Minister attached to the Prime Minister's Office, Thailand and attended by:

H.E.: Pehin Dato Abdul Rahman Taib, Minister, Ministry of Industry and Primary Resources, Brunei Darussalam:

H.E. Kong Vibol, Vice Chairman of Council for the Development of Cambodia and Secretary of State for Economy and Finance, Cambodia;

H.E. Risaldi Kasri, Deputy Chairman for International Cooperation and Investment Promotion, Board of Investment and State-owned Enterprises, Indonesia;

H.E. Soulivong Daravong, Minister, Ministry of Industry and Handicraft, Lao PDR;

H.E. Y. Bhg. Tan Sri Asmat Kamaludin, Secretary-General, Ministry of International Trade and Industry, Malaysia;

H.E. Brigadier General Pyi Sone, Minister for Commerce and Member of Myanmar Investment Commission Myanmar;

H.E. Manuel A. Roxas III, Secretary of Trade and Industry, Department of Trade and Industry, Philippines;

H.E.  BG (NS) George Yong-Boon Yeo, Minister, Ministry of Trade and Industry, Singapore;

H.E. Vu Huy Hoang, Deputy Minister, Ministry of Planning and Investment, Vietnam;

H.E. Rodolfo C. Severino, Jr., Secretary-General of ASEAN, and their respective delegations.