ASEAN Agrees on Liberalisation, Environment

21 December 1998

Southeast Asian leaders last week met in Hanoi for the sixth Association of South East Asian Nations (ASEAN) summit, where they adopted a "Statement of Bold Measures" designed to foster investor confidence and speed economic recovery in beleaguered ASEAN countries. ASEAN members agreed to an investor-incentive package for the manufacturing sector, including tax breaks and 100 percent foreign equity ownership. Ministers also agreed to a feasibility study on establishing an ASEAN currency and exchange rate system and measures to "reduce over-dependence on bank financing and limiting risks of financial crisis."

ASEAN ministers agreed as well to move forward with tan ASEAN Free Trade Area (AFTA) partially ahead of its 2003 implementation schedule. Under the agreement signed last week, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand agreed to implement a free trade area by 2002, while less-developed ASEAN countries have until 2006-2008 to come into the fold.

ASEAN leaders are eager to restore confidence in the region after struggling under the weight of economic catastrophe for over a year. However, observers note that changes to domestic policies that ASEAN members will have to make are politically difficult in light of the economic crisis, and would carry additional social costs at a time when local businesses are already struggling and unemployment is growing.

In related news, ASEAN environment ministers last month agreed to more regional co-operation on a number of transborder environmental issues. Ministers agreed to collaborate on issues including haze pollution caused by slash and burn forest fires, and to establish new working groups to address nature conservation and biodiversity, coastal and marine environment, and multilateral environment agreements.

ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

"ASEAN pacts speed trade liberalisation," INTERNATIONAL HERALD TRIBUNE, December 17, 1998; "ASEAN sets its sights on trade boom," INTERNATIONAL HERALD TRIBUNE, December 15, 1998; "ASEAN summit to press for open markets," WALL STREET JOURNAL, December 15, 1998; "L'ASEAN veut s'ouvrir à son rythme," LE FIGARO, December 16, 1998; "SOUTH-EAST ASIA: Time for self-criticism by ASEAN," IPS, December 10, 1998; "SOUTH-EAST ASIA: After summit, time to sell prescriptions at home," IPS, December 16, 1998: "ASEAN ministers agree to co-operate on host of transborder environment issues," INTERNATIONAL ENVIRONMENT REPORT, December 9, 1998.

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