Joint Press Statement
1. ASEAN Ministers responsible for investments met on 11 September 2002 in Brunei Darussalam. The Ministers were encouraged by the recovery of foreign direct investment flows to Southeast Asia in 2001 despite the sharp decline in global FDI flow and the slowdown in the global economy.
2. Based on balance-of-payments data, FDI to the region increased by 13.4 percent, up from US $11.52 billion in 2000 to US $13.06 billion in 2001. There were no significant changes in the sources of FDI flow to the region. For the period 2000-2001, FDI from the USA increased by 30 percent last year, EU by 57 percent. Investments from Japan in 2001 significantly increased from a divestment in 2000 to US$ 896 million. Intra-ASEAN investment increased by 10 percent. These countries and regions together accounted for about 88 percent of the total FDI flow into and within the region in 2001. The Council welcomed this positive development and noted that the 11th September terrorist attacks have limited impact on foreign and ASEAN firms’ investment plan and commitment to the region.
3. Reinvestment earnings continue to play a significant role in supporting the increase in FDI flow to the region in 2001. For instance, reinvestment earnings accounted for more than 75 percent of the total FDI value in 2001 in Malaysia and Singapore, and 33 percent in the case of FDI flow to the Philippines. These figures suggest the importance of existing FDI as an important source of investment for the region. It further suggests that aside from attracting new FDI, increasing attention needs to be given to promoting FDI finance by reinvestment earnings.
4. The number and value of cross-border mergers and acquisitions in the region declined last year. While this trend is consistent with the global situation, it however implies that the increase in FDI flows to the region last year was contributed more by green-field activities rather than cross-border M&A transactions.
5. Given the improved regional business environment and the expected stronger regional economic growth in 2002, the Council is confident that the outlook for FDI flow to ASEAN will continue with the upward trend.
New ASEAN Investment Initiatives
6. A 2-year ASEAN Investment Initiative, which aims to further improve the competitiveness and attractiveness of the region, was endorsed by the Council for immediate implementation. The initiative contains specific set of collective activities for promoting and facilitating FDI to the region. These activities include, among others, ASEAN Investment Fair/ASEAN Business Summit, Industry events, ASEAN Investment Networking and Outreach Programme to more actively involve the private sector, capacity building programme to narrow the development gap, and other activities to enhance the AIA process.
7. The Council expressed strong support for the forthcoming ASEAN Trade Fair, which will be held on 14-20 October 2002 in Bangkok. Given that the Fair provides an important platform to collectively promote FDI, the Council encouraged all ASEAN countries to take active part in the Fair and in presenting ASEAN as an investment region to investors.
8. In light of the importance of FDI from major economies into ASEAN countries, the AIA Council is committed to engaging these economies in sustaining and enhancing investment flows to ASEAN.
9. This, the Council recognizes, goes beyond a focus on intra-ASEAN sources of investments, to encompass ASEAN investment relationships, not only from traditional investment sources but also from emerging capital exporting economies such as China and the CER. It acknowledges the global trend towards regional economic groupings, and the need for ASEAN to nurture dynamic investment relationships with these groupings.
10. The Council has endorsed a new initiative – under which ASEAN will collectively engage major economies and economic groupings keen on investing in ASEAN. These engagements can initially take the form of official consultations which will build mutual understanding for investment regimes, processes and methodologies.
11. The Council is confident that in time, the AIA process, which has demonstrated ASEAN’s commitment to investment promotion and liberalisation, could be enhanced by this new initiative.
The AIA Process
12. The Council was pleased with the progress made in the implementation of the schedules and provisions of the AIA Agreement in 2001-2002. Among the deliverables attained during this period include the submission of the Temporary Exclusion List and Sensitive List for services incidental to the manufacturing, agriculture, fishery, forestry, and mining operations.
13. The AIA Agreement, which was signed on 7 October 1998 and is now in force, aims to attract high levels of foreign direct investment flows into and within ASEAN through providing a competitive investment environment and to promote ASEAN as an investment region.
14. In strengthening the AIA process, the Council agreed to commence the review process next year on the sectors and measures contained in the Sensitive List and on the commitments of Member Countries contained in their respective Individual Action Plans.
15. The Council continued to engage the private sector in the AIA process through dialogue and consultation. Following the arrangement initiated last year, the Council had a dialogue with the private sector, in particular the members of the US-ASEAN Business Council, to discuss on investors’ perspective in investing in the region and on the AIA process.
16. The Council welcomed the continuous efforts made by the officials in enhancing transparency through publications, provisions and dissemination of information. The Council also expressed satisfaction with the work of the Working Group on FDI Statistics in ASEAN in further improving the methodology, quality and comparability of FDI statistics in the region. A “Comprehensive FDI Data Set – 2002 edition” was presented to the Council. Given the usefulness of the FDI statistics to various users, including investors and business people, the Council agreed that the 2002 FDI data set be published immediately to provide a better understanding of the FDI situation in the region by the public.
17. The Fifth AIA Council Meeting was chaired by H.E. Pehin Dato Abdul Rahman Taib, Minister of Industry and Primary Resources, Brunei Darussalam, and attended by:
H.E. Kong Vibol, Secretary of State of Economy and Finance and Vice-Chairman of the Council for the Development of Cambodia;
Mr. Risaldi Kasri, Deputy Chairman of Investment Promotion, Indonesia;
H.E. Soulivong Daravong, Minister of Industry and Handicraft, Lao PDR;
H.E. Tan Sri Datuk Zainal Abidin Sulong, Chairman of the Malaysian Industrial Development Authority;
H.E. Brigadier General David O. Abel, Minister at the Office of the Chairman of the State Peace and Development Council, Myanmar;
Mr. Ramon Vicente Kabigting, Director of International Trade Relations, Department of Trade and Industry, Philippines;
H.E. BG (NS) George Yong-Boon Yeo, Minister for Trade and Industry, Singapore;
H.E. Captain Suchart Jaovisidha, Deputy Minister of Finance, Thailand;
H.E. Vu Huy Hoang, Deputy Minister of Planning and Investment, Viet Nam;
H.E. Rodolfo C. Severino, Jr., Secretary-General of ASEAN, and their respective delegations.
