During the year under review, several initiatives to intensify cooperation in the area of finance and banking as identified by the Heads of Government at their Third Summit Meeting were launched. The ASEAN Committee on Finance and Banking (COFAB), at its 16th Meeting in Chiang Mai, Thailand in May 1988 reviewed the status of ASEAN economic cooperation in finance and banking, taxation, customs, and insurance.
Among the important measures to promote and enhance intra-ASEAN trade is the use of ASEAN member countries' currencies for intra-ASEAN trade. The use of ASEAN currencies has been increasing following COFAB initiatives together with collaboration from the monetary authorities to promote their use. In addition, a project aiming to assess the possibility of extending the use of ASEAN countries' currencies to intra-ASEAN Investment was endorsed by the 20th AEM and has since been submitted to UNDP for funding consideration.
COFAB, as the assigned body to monitor the implementation of the ASEAN - Japan Development Fund (AJDF), has developed a framework to monitor its utilization both for the loan and the equity portions. Having endorsed the framework, the AEM further requested COFAB to monitor and submit regular progress reports on the status of the disbursement of the Fund.
The recommendation on the "ASEAN Positions on International Monetary Situation" proposed by COFAB was adopted by the AEM while the ASEAN position on the issue of "Trade in Financial Service" was referred to COTT for consideration.
In the field of tax and customs cooperation measures including training programmes to enhance the efficiency of the ASEAN tax and customs administrators are under implementation. A training Programme for the ASEAN insurance commisions is also underway after the project was approved by UNDP.
The ASEAN private sectors in the finance and banking area have also been particularly active. The ASEAN Reinsurance Corporation of the ASEAN Insurance Council which was incorporated in Singapore on 17 December 1988 is expected to commence its commercial operation in the latter part of 1989. Meanwhile, the ASEAN Banking Council launched a new measure in realizing the potentials of ASEAN in providing viable investment opportunity through the launching of the ASEAN Fund Ltd. in November 1988. The ASEAN Fund is a source of long term equity and quasi-debt capital which would be tapped to finance economic growth in ASEAN. The main objective of the US$ 150 million Fund is long-term capital appreciation through investment in equity-based securities (such as shares, convertible bonds and warrants) of companies in the ASEAN countries.
Cooperation in Customs Matters
The ASEAN customs administrators, at the 13th Meeting of ASEAN Working Group on Customs Matters (AWGCM) in Kuala Lumpur in March 1989 where discussions focussed on several areas of concern. Discussions were held on various issues of common interest and information on existing practices in the field of prevention, investigation and repression of customs offences and those involving drug trafficking as well as on customs procedures relating to import, export, drawback and warehousing system was updated and exchanged. This has been a continued activity to assist member countries in improving overall customs practice and procedures.
In addition to the above, recognising the benefits of the exchange of the information customs fraud, the Customs Administrators urged member countries concerned to increase cooperation on this matter, particularly on all major cases.
On the new commodity classification system or the Harmonized System (HS) of the Customs Cooperation Council, it was noted that except for Brunei Darussalam all the other ASEAN countries have already adopted the HS. Brunei Darussalam was making arrangements for the conversion from the CCCN to the HS.
The training programme for ASEAN customs administrators assisted by UNDP under the project "Assistance to ASEAN COFAB on Customs Training and Development" made a satisfactory progress. The project consists of a series of seminar/training courses with emphasis on the issues of the Harmonized System, GATT Valuation Code, tariff structure, computerization and simplification and harmonization of customs procedures. As a start, National Seminars on the Harmonized System aiming to familiarize the customs administrators in each ASEAN country with the system were conducted in a number of countries. The seminar on Customs Computerization System had been held while the Seminar on GATT Valuation Code was scheduled to commence within second hald of 1989.
As a new initiative, the 13th AWGCM invited private sector to present its views on matters relating to customs operations and procedures. This was intended to improve working relationship with the private sector and also to enhance trade facilitation.
Another initiative was to intensify the efforts in facilitating the ASEAN Preferential Trading Arrangement (PTA). As the implementing agency for PTA, the ASEAN Customs Administrations would play an active role in monitoring and assisting this arrangement. It is agreed that as a start, the import and export procedures would be looked into with a view to assessing the differences and similarities between member countries.
Cooperation in Insurance
At the Fourteenth Meeting of the ASEAN insurance Commissioners (AICS) was held in Yogyakarta, Indonesia on 11 - 16 November 1988, the Commissioners exchanged views and experiences regarding insurance industries, their performance and prospects, supervisory measures and control as well as training needs. They also reviewed the progress in various areas of cooperation and was satisfied with the results, especially in the following areas:
a) Mortality Studies of Assured Lives
The tables of mortality rates which were updated annually continued to provide valuable information to the ASEAN life insurance business and allow them to underwrite their business based on the actual experiences and trends. The AICs in recognition of this contribution, agreed to continue the work and to further expand the scope of the studies to include the experience of accidental death and total permanent disability in the participating countries.
b) insurance Education and Training
For the cycle 1988 - 1991, the project on Insurance Education and Training, was implemented. During 1989, three training courses/ workshops were expected to be completed while the subsequent workshops would be implemented during the next two years.
c) Comparative Studies of ASEAN Insurance Laws
The AICs continued to monitor and compile the changes in insurance legislations of member countries. As agreed, future work would also include a new section on tax laws applicable to the insurance companies in the region.
d) Unified Forms of Insurance Statistics
The Insurance Statistics Forms were simplified and reduced in accordance with the direction taken at the 13th Meeting of the ASEAN' Insurance Commissioners. Together with a revised format of the Final Report and new schedule, the Final Report was expected to be distributed much earlier than before.
On projects with Dialogue Partners, the AICs agreed to make a reassessment with a view to seeking a new avenue of cooperation.
The ASEAN Reinsurance Corporation (ARC) has made notable progress. Evolving from the ASEAN Reinsurance Pool, this undertaking which is a brainchild of the ASEAN Insurance Council, the private sector affiliate of the AICS, aims to increase the retention capacity of the reinsurance business in the region. With an initial authorized capital of S$ 30 million, the ASEAN Reinsurance Corporation commenced its commercial operations in the latter part of 1989.
Cooperation in Tax Matters
Discussion on various issues under the purview of the ASEAN Working Group on Tax Matters (AWGTM) took place at the 8th Meeting, which was held in Singapore in June 1988. Among the important issues, topic of the taxation of life insurance business received much attention. The indepth treatment of this topic was in recognition of the fact that taxation on the financial intermediaries such as insurance business is one of the more complex area of public finance, the AWGTM Meeting provided a useful forum to focus on, the problems and different approaches to this matter.
Leasing, a recent innovative financial tool, was considered by COFAB to be a useful and beneficial vehicle for economic development. COFAB therefore directed the AWGTM to study further the possibility of formulating a basic framework of leasing regulations for guidance of ASEAN. To that end, the Ad-Hoc Committee on Leasing was established at its Meeting in Singapore in November 1988 adopted guidelines for determination of a lease for tax purposes and a tax treatment of a cross-border lease. The leasing guidelines which have been identified will be submitted to the AWGTM for approval at its meeting in. June 1989 before submission to COFAB.
Leasing and tax treatment of leasing transactions would also be the topics of the first seminar under the ASEAN tax training programme. The programme is intended to enhance the efficiency of the ASEAN tax administrator through the provision of in-house, intra service and in-depth training courses.
A continued use of the Intra-ASEAN Model of Double Taxation was also noted. The Model has served as a guide in negotiating with third countries for an agreement on the avoidance of double taxation.
A Seminar on Hydrocarbon Taxation for ASEAN organized by the ESCAP and financed by UNDP took place in Jakarta in June 1988 with. participation from finance/taxation officers and petroleum ministers of member countries. The seminar served as a useful forum to discuss and exchange experiences on taxation of the petroleum industry so that efficient tax structure and fiscal policies could be evolved based on collective experience.
During the 8th Meeting, the AWGTM and the ASEAN Federation of Accountant (AFA) held a Joint Session where there was a fruitful exchange of views between the two groups representing the private and public sectors of ASEAN. The focus was on the promotion of trade and investment among the relationship between tax administrators and accountants, such Joint Session has become a regular feature of the AWGTM meetings since the 7th Meeting.
For more information, please refer to the project details
|
