1. During the year under review, the Committee on Finance and Banking (COFAB) which held its 19th Meeting on 21-23 May 1991 in Chiang Rai, Thailand reviewed the implementation progress of the directives endorsed by the Third Summit in 1987 and other programmes under its purview.

2. As a result of continuous efforts by member countries to liberalize their respective foreign exchange controls, the use of ASEAN currencies for intra-ASEAN trade and investment has been on the increase. The statistics on trade settled in ASEAN currencies in Indonesia, Malaysia, Philippines and Thailand indicated greater use of ASEAN currencies in payments for intra-ASEAN trade. In the case of Brunei Darussalam and Singapore, it may be noted that both countries had no foreign exchange controls and have no statistics on the breakdown of trade transactions by currencies.

3. On the ASEAN-Japan Development Fund (AJDF), Indonesia, Malaysia and the Philippines continued to actively utilize their respective allocations for national projects.

4. However, the 23rd AEM Meeting noted that there has been no project proposed to be funded under category A (regional project) scheme. The Meeting therefore urged the ASEAN Committee concerned to identify regional projects for funding by AJDF Category A.

5. Japan has agreed to extend the AJDF which expired in 1991 for another one year until 1992.

6. As a new initiative to strengthen ASEAN economic cooperation in the area of finance and banking, the Fourth ASEAN Summit, endorsed the decision reached at the 23rd AEM Meeting, Kuala Lumpur, October 1991, that cooperation in the field of capital market development be further pursued. An Expert Group comprising relevant authorities from member countries will convene as requested by the 19th COFAB Meeting to identify possible areas of ASEAN cooperation in capital market development.

   Cooperation in Custom Matters

7. At the 16th Meeting of the ASEAN Working Group on Customs Matters (AWGCM) held in Bangkok on 27-29 April 1992, ASEAN customs authorities continued to update information on the existing customs practices in ASEAN such as on the prevention, investigation and repression of customs offences and those involving drug trafficking, procedures of imports and exports as well as drawback systems and warehousing.

8. With regard to the ASEAN Customs Code of Conduct the 16th Meeting of AWGCM discussed the proposed modification and amendment to reflect changes that had taken place since its. adoption in 1983 including the provisions on the base of ASEAN Customs Valuation, additional amendments on narcotics and computerization and provisions on modification procedures. The modification will be formalized in the form of protocol by ASEAN customs authorities.

9. The AWGCM also continued to discuss the role of the ASEAN customs authorities in enhancing ASEAN economic cooperation to an expanded economic cooperation as foreseen by the ASEAN Free Trade Arrangement (AFTA) Agreement. In this regard the 16th AWGCM endorsed all the recommendations of the Task Force Meeting held in Kuala Lumpur, December 1991 on the simplification and harmonization of customs import and export procedures and on customs tariff structures.

10. With regard to the decision of the Fourth ASEAN Summit, January 1992 in Singapore, to abolish all Economic Committees, the 16th AWGCM Meeting agreed to recommend to SEOM that the Working Group on Customs Matters should be instituted under SEOM and continue to function under the existing term of reference.

    Cooperation in Tax Matters

11. Tax Authorities at their 12th Meeting of the ASEAN Working Group on Tax Matters (AWGTM) in Bandung, Indonesia on 18-20 June 1992 discussed extensively issues related to "Revenue Raising Through Improvements of Tax Information System". The main issues discussed related to the collection, storage, process and utilization of information both manually and by computer for purposed of taxation. Existing systems in ASEAN countries were highlighted, including the constraints in the system and suggestions for improvements.

12. On the Tax Training Programmes, a training course on Value Added Tax (VAT) was conducted in April 1992, Seoul under the ASEAN-ROK Development Cooperation. The training has given participants from ASEAN better insight into VAT imposition in ROK.

13. The ASEAN tax authorities further agreed that the ASEAN countries, through the AWGTM, should continue to strengthen efforts towards maximising the utility of and benefits from the exchange of information provisions, in double taxation treaties.

14. As regards the decision of the Fourth ASEAN Summit in January 1992 in Singapore, to abolish all Economic Committees, the 12th AWGTM agreed to recommend to SEOM that the function of the Working Group on Tax Matters should be maintained and the AWGTM should be instituted under SEOM.

    Cooperation in Insurance

15. The 17th ASEAN Insurance Commissioners Meeting held in Chiang Mai, Thailand on 26-29 November 1991 continued to function its catalytic role in strengthening of ASEAN cooperation in insurance. The Meeting reiterated the need for ASEAN to move closer particularly in response to the changes around the globe and the impacts on economies in general, in particular on the insurance business in ASEAN.

16. The Committee for Mortality Studies of Assured Lives (COMSAL) has completed its work successfully and its report regarding the trend mortality rates of insured lives in the participating countries could benefit the insurance industry in ASEAN in formulating policy on insurance premium.

17. On insurance education and training for insurance supervisory staff, several courses were conducted to upgrade the insurance personnel of ASEAN. The seminar on motor insurance in Kuala Lumpur on 25-29 November 1991, study tour and attachment programme in Canada on 24 May - June 1991 were implemented satisfactorily. Under the ASEAN-ROK Development Cooperation an observation tour on insurance industry in Seoul, Korea in May 1992 was also successfully implemented.

18. The ASEAN Insurance Council (AIC), continued to actively pursue cooperation activities among its members. At the 17th Meeting, the Council highlighted issues related to insurance industry in ASEAN such as the need to strengthen ASEAN Reinsurance Corporation by granting local treatment and enlarging its capital base. Concern was also expressed by the private sector over liberalization measures which ASEAN countries might be required to take under GATT.

19. ASEAN Reinsurance Corporation, one of the initiatives endorsed by the Third ASEAN Summit, is now in its third year in operation and continued to make satisfactory progress. Its booked premium income has grown from S$2.5 million in 1989 to S$5.4 million in 1990 and up to the first three quarter of 1991, booked premium amounted to S$3.8 million. The Corporation will continue to concentrate on the ASEAN region and will intensify its marketing efforts to harness the support given by shareholders and non-shareholders in the region.

For more information, please refer to the project details