AFTA TO BOOST INVESTMENT IN ASEAN, SAYS MINISTER

KUALA LUMPUR, Nov 18 (Bernama) -- The Asean Free Trade Area (AFTA), which is
coming into force from Jan 1 next year, will help to boost investment in Asean,
International Trade and Industry Minister Mustapa Mohamed said Wednesday.

"Asean has its attractiveness because of the growing affluence. Not just
China and India, but other Asian economies are also doing well," he told
reporters at a media briefing on AFTA here.

Total foreign direct investment flow to the region increased from US$21.1
billion in 1995 to US$60.6 billion last year while intra-Asean investment
totalled US$11.1 billion last year.

Mustapa said the AFTA has led to rising inflow of foreign investment with
many multinationals investing in the region due to the political stability,
availability of semi-skilled and skilled workforce, and incentives provided.

The AFTA's ultimate target is to totally eliminate import duties on all
products with the intention of creating an integrated market where there will be
a free flow of goods within the region.

The AFTA council agreed that the target date to achieve this objective would
be 2010 for six Asean members comprising Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand, and 2015 for the newer members, namely
Cambodia, Laos, Myanmar and Vietnam.

All products have to comply with rules of origin (ROO) to enjoy zero per
cent duty.

The ROO requires the goods to have 40 per cent local Asean content under
the Common Effective Preferential Tariff as well as to comply with standards and
sanitary and phytosanitary regulations.

Mustapa said the liberalisation of trade in the region via elimination of
both intra-regional tariffs and non-tariff barriers had contributed towards
making Asean's manufacturing sector more efficient and competitive in the global
front.

"As a result, consumers are able to source goods from the more efficient
producers in Asean, thus creating a robust intra-Asean trade," he said.

To the Malaysian business community, Asean would be a single integrated
market offering increase business opportunities for trade in goods, services and
investments, he added.

Asked whether the AFTA may be postponed due to the conflict between Thailand
and the Philippines over the rice tariff, Mustapa said it would not hold up the
implementation, with both countries continuing their negotiations.

Thailand, the world's largest rice exporter, had threatened not to sign the
AFTA liberalisation for the rice trade next year if the Philippines does not
import at least 360,000 tonnes of rice tariff-free annually from Thailand.

Under the AFTA, Malaysia is committed to eliminate import duties on 1,943
products, reduce import duties to five per cent for sensitive items like
tropical fruits, tobacco and tobacco products, and lower import duties for rice
and rice products to 20 per cent.

Mustapa said the services sector would be the next target for the AFTA as it
has been earmarked as the next engine of growth, adding that Malaysia is
committed to open up 65 sectors to Asean gradually in the next few years.

"We are on track to open up these sectors. It is not just the local market
being penetrated by our trading partners, but also the overseas markets which
Malaysian companies would have the opportunity to penetrate as well," he said.

Mustapa said the ministry was planning to put up articles in the press early
next month on the AFTA implications to the business community and consumers.

Asked whether Malaysia's lower ranking on the global Corruption Perception
Index will have an impact on foreign investment, Mustapa said it was not a big
factor in terms of investment decisions due to Malaysia's continuing commitment
to fight corruption.

In the latest Corruption Perception Index carried out by Transparency
International (TI), Malaysia was ranked 56th among 180 nations surveyed, down
from its 46th position in the previous index.
-- BERNAMA