Posts tagged ‘ASEAN’

August 9, 2014

Asia Leaders Stress Cooperation With Russia at Summit

The Wall Street Journal - World

Asia Leaders Stress Cooperation With Russia at Summit

Dialogue Is Key in Probe of Downed Malaysia Airlines Flight 17, Diplomats Say

Aug. 8, 2014 11:04 a.m. ET

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Left to right, Malaysian Foreign Minister Anifah Aman, Brunei Foreign Minister Pehin Dato Lim Jock Seng and Cambodian Foreign Minister Hor Namhong at the Myanmar International Convention Center in Naypyidaw Friday. Agence France-Presse/Getty Images

NAYPYITAW, Myanmar—Southeast Asian diplomats said Friday that they won’t pressure Russia over the downing of Malaysia Airlines Flight 17, trying to keep an Asian security summit that includes Moscow focused on dialogue and the need for cooperation in an investigation.

The 10-member Association of Southeast Asian Nations raised the issue in discussions among themselves Friday but will keep the focus during wider talks this weekend on the need for a transparent investigation.

The Asean Regional Forum will be attended by U.S. Secretary of State John Kerry. Russian Foreign Minister Sergei Lavrov is also expected to attend. So are their counterparts from China, Japan, South Korea and other powers with interests the region.

K. Shanmugam, Singapore’s minister of foreign affairs, told reporters that “Asean is not proceeding with Russia as the guilty party.”

The Boeing 777 was shot down by a surface-to-air missile July 17 over eastern Ukraine, killing all 298 people on board the Amsterdam-to-Kuala Lumpur flight. The U.S. and Ukraine have said the missile was fired by rebels backed by Russia, a charge Moscow denies.

The unstable security situation in the area has repeatedly stalled an investigation on the ground, though most the bodies have been recovered and transported to the Netherlands for forensic identification following intense backdoor diplomacy by Najib Razak, Malaysia’s prime minister.

Malaysia hasn’t adopted a confrontational stance against Russia but demanded free access to the crash site for investigators. Malaysia’s attorney general has said the country has the right to prosecute the people who fired the missile.

Malaysia will chair a bilateral Asean meeting Saturday with Russia. Asean operates by consensus and seldom takes a confrontational approach in relations with the bigger powers with a footprint in Asia.

“Don’t expect any statement or pressure on Russia,” said Ye Htut, Myanmar’s information minister. “The Asean Regional Forum is not to force any other country. It’s about mutual respect and dialogue.”

Malaysian officials weren’t immediately available for comment.

The downing of Flight 17 followed the disappearance March 8 of Flight 370 dwith 239 people on board over the Indian Ocean for reasons that remain unknown.

Earlier Friday, Malaysia’s state investment arm Khazanah Nasional Bhd, which owns nearly 70% of Malaysia Airlines, disclosed a US$430 million plan to take the loss-making flag carrier private, a first step in a restructuring that could force layoffs and board changes.

The three-day meeting in Myanmar’s capital will also discuss the territorial disputes in the South China Sea. China has increasingly pressed military claims to nearly the entire sea and engaged in a tense two-month standoff with Vietnam by moving an oil-exploration vessel into the disputed waters. China withdrew the vessel last month but has asserted its companies were within their rights.

The Philippines, Brunei, Malaysia, all Asean members, also have claims, as does Taiwan. Asean has been divided in recent years between members who want to push a stronger unified position against China and others that don’t. A Code of Conduct to avoid escalation of disputes has stalled for a decade.

China has proposed some measures that it describes as “low hanging fruit” that will be discussed, Mr. Shanmugam said. He didn’t disclose details.

Mr. Shanmugam said that Asean nations believe that “substantive moves” are needed on the code of conduct. He also said that every nation has an interest for incidents in the disputed area to be “contained.”

“You need to start looking at what can be done to move ahead,” Mr. Shanmugam said. “There is consensus on trying to move on the code of conduct.”

The U.S. is expected to back a demand by the Philippines for a temporary moratorium on all activities in the disputed area. Mr. Shanmugam said the U.S. call wasn’t discussed Friday.

Write to Gaurav Raghuvanshi at and Shibani Mahtani at



June 24, 2014

Laos stuggles to meet vaccin goals

Steve Finch, Vientiane, Laos

June 23, 2014

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Vientiane, Laos has one of the highest economic growth rates in the region in recent years – about eight percent — but it also has a budget shortfall. That means many state workers including doctors and nurses also haven’t been paid in months.

Amid the ongoing fiscal crisis, aid workers were concerned the government wouldn’t meet a sharply rising financial commitment to fund patchy, but improving immunization coverage. In the absence of a local commitment, there was concern international donors would cry foul, potentially threatening the country’s vaccination program.

Then on May 12, UNICEF reported that Laos had deposited the requisite $530 000, confirming the landlocked Southeast Asian state’s small commitment to the program, which totaled US$7.9 million in 2014. The government’s commitment has placated foreign donors, guaranteeing coverage for the majority of the country’s nearly seven million people.

“In light of the fiscal situation, it is encouraging that the government of Laos is continuing to commit its financial resources to high impact and life-saving interventions for children, such as immunization,” said Julia Rees, acting head of UNICEF’s Laos office, the procurer of vaccines for the country.

In at least one province, local authorities had already asked an international health nongovernmental organization to help fund immunization efforts.

Dr. Soulivanh Pholsena, director of foreign relations at the Laos Ministry of Health, did not respond to questions on the country’s vaccination program.

Laos aims to graduate from least developed country status by 2020 — the first country in the world to state such an ambition — which will mean lowering donor funding. To that aim, the government has been asked to contribute sharply rising annual payments towards routine vaccines. It started funding them in 2012 with a payment of just $22 400.

“Over time, countries take on an increasing share of vaccine costs so that — when the time is right — they are ready to assume the full costs of financing their vaccine programs,” said Rob Kelly, a spokesman of GAVI Alliance, which has disbursed US$19.3 million since 2000 as one of the biggest funders of immunization in Laos.

Although a new real-time, digital vaccine supply system that tracks cold storage and delivery to patients was introduced this year and major progress has been made recently, many people in remote areas still do not receive routine vaccinations.

Laos has increased coverage for measles from just 40% of the population in 2007 to 82% last year, according to the national statistics bureau. But in four provinces, still less than a quarter of babies at the critical age of 12 to 23 months are immunized against the disease.

While the mortality rate for under-fives has reduced much faster than expected, studies by the University of Washington this month did not include Laos on a list of countries expected to achieve the UN Millennium Development Goal for reducing child mortality.

Viorica Berdaga, head of health and nutrition at UNICEF Laos, said there was still every chance of reducing under-five deaths by two-thirds to meet MDG4 in time for next year.

“To maintain this pace the government of Laos should continue to increase its resources for the delivery of child survival interventions to those who are hardest to reach,” she said.


June 23, 2014

ASEAN As A Single Market: What, When, How, And Really?

ASEAN As A Single Market: What, When, How, And Really?

Jun. 22, 2014 9:17 AM ET  |  Includes: ASEA

By Laurel Teo, CFA

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Are you eyeing investments in Asia, but tired of the usual “China,” “India” options? Tempted to investigate an exciting growth region somewhere south of the former and east of the latter?

The 10 countries that make up the Association of Southeast Asian Nations (ASEAN) are now moving towards economic integration. First announced more than 10 years ago, the ASEAN Economic Community (AEC) is due to be established by 2015.

With less than a year left to the official deadline, there’s been a revival of interest in this potential unified market comprising a diverse mix of nascent frontier markets (Laos, Cambodia, and Myanmar), rising economies (Indonesia, the Philippines, and Vietnam), established markets (Thailand and Malaysia), and wealthier states (Brunei and Singapore). News media, research outfits, and even industry conferences are beginning to flirt with the theme.

A recent report by McKinsey (Understanding ASEAN: Seven things you need to know) highlights some key attractions of ASEAN as a collective market:

  • Combined GDP of $2.4 trillion in 2013, making it the seventh-largest economy in the world if it were a country. Projected to be fourth largest by 2050.
  • Population of 600 million, ahead of North America or the European Union. Labour force is third largest in the world, behind only China and India.
  • Almost 60% of total growth since 1990 has been derived from productivity gains.
  • ASEAN’s five key members (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) together pulled in more foreign direct investments than China in 2013 ($128 billion vs $117 billion)

Those of us from the investment and financial industry may be drawn to a specific section of the AEC Blueprint focusing on capital markets. When implemented, the measures proposed will ensure that within ASEAN:

  • Capital can move freely across borders.
  • Issuers are free to raise capital anywhere.
  • Investors can invest anywhere.

Theoretically, investors should be able to trade capital market products freely in any ASEAN market from a single access point, while capital market intermediaries should be able to provide services throughout the region, based on home country approval.

Too good to be true? Possibly. While the plans and priorities have been approved by the respective governments, the devil is always in the details – in this instance, the speed and extent of implementation.

There is a host of initiatives and actions outlined in the AEC Blueprint, divided into four broad areas, targeted to be phased in over eight years (2008 to 2015). However, the general consensus by observers and ASEAN watchers is that a full integration will not happen by the end of 2015.

That’s not to say that progress hasn’t been made.

To monitor the AEC process, ASEAN set up an AEC Scorecard, tracking implementation in four phases (2008-2009, 2010-2011, 2012-2013, and 2014-2015). Reports for the first two phases (2008-2011) have been published.

So far, ASEAN has scored best in terms of integrating the region into the global economy (namely creating free-trade agreements, or FTAs, between ASEAN and other major economies, e.g. China, India, Japan, Korea, Australia, and New Zealand). More than eight in 10 (85.7%) measures in this area targeted for the first two phases have been achieved.

However, when it comes to promoting a single market and production base, such as free flow of investment and freer flow of capital, only slightly under two-thirds (65.9%) of the targeted initiatives for this period (2008-2011) have been accomplished. The pace in this area has also slowed. Where almost all of the single-market initiatives in Phase 1 (93.8%) were on track, the pace had halved (49.1%) by the end of Phase 2.

What does this mean? While investors and business people should not hold their breath for full integration come 2015, they can and should expect pockets and even swathes of areas where capital, services, and goods begin to flow more freely. Those ASEAN members that are better prepared will kick-start the initiatives, with the circle widening as and when other member economies are ready to join.

This accretive approach is typical of ASEAN, going by historical precedents (not only of the AEC thus far, but also most other earlier cooperation efforts).

In the case of the AEC, a trading link allowing investors to connect to and trade on other exchanges in the region went “live” with just the Malaysia and Singapore bourses in September 2012; Thailand joined shortly after. Vietnam, Indonesia, and the Philippines have agreed to the scheme in principle, but delayed coming on board, pending technology upgrades and other practical concerns.

Likewise, the ASEAN funds passport scheme is scheduled to go live this year with three core members: Malaysia, Singapore, and Thailand. Known officially as the ASEAN Collective Investment Schemes (CIS) Framework, it will allow fund managers operating in one market to offer CIS (typically mutual funds or unit trusts) directly to retail investors in the other two member markets. All members will adopt a set of common standards in areas such as qualifications, investment limits, and capital requirements for instance, to ensure that retail funds are managed based on industry best practices.

And even though it’s just three markets to start with, the trio’s combined assets under management (AUM) is still a sizeable chunk – $240 billion at the end of 2012 – sufficiently attractive to warrant the interest of the investment industry.

An internal projection by BNP Paribas Securities Services reckons that the AUM could reasonably grow between 33% (to $317 billion) and 70% (to $400 billion) over the next five years, depending on the impact of ASEAN passporting on funds growth.

The projection, discussed in a recent report in Asian Investor (“Exploring the Asean fund passport’s potential”), further considers a scenario with Indonesia and the Philippines joining. This could expand AUM to $470 billion in the same period.

So even with partial integration, there are still benefits to be reaped. As BNP Paribas Securities Services Senior Executive Mostapha Tahiri put it in the report: “As Malaysia and Thailand are relatively closed fund markets, the passport gives local and global players immediate benefits from cross border distribution.”

A potential stumbling block, however, could be the simple fact that outside of governments, a vast majority of the private sector remains unaware or unconvinced about the AEC and its merits, if any.

Consider this particularly telling episode at the inaugural ASEAN Economic Congress, a new conference organized earlier this year by Euromoney on the AEC.

A panelist threw out this question to the 400-plus delegates in the hall: “How many of you have seriously thought about what the AEC means to your business? Is anyone’s company preparing for how business is going to change? Has anyone received any company training about the AEC?”

Not a single hand was raised. Clearly, people were either completely oblivious to the AEC, or completely skeptical that the AEC will make any difference, the panelist observed wryly.

A more scientific assessment in 2012 had indicated as much. The ASEAN Economic Community Business Survey polled 381 firms from nine of the 10 ASEAN countries and found that more than half (55%) were unaware of the AEC 2015. In contrast, more than two-thirds of the same sample knew about the ASEAN FTA with China. In fact, a consistently higher proportion was aware of other ASEAN free-trade agreements (with India, Korea, and Australia and New Zealand) compared to the AEC.

Based on responses to a number of other questions, the report by National University of Singapore economics don Albert Hu concluded:

“… what drives the business community’s interest in AEC 2015 is the actual process of economic integration. We can infer from this that the lack of awareness of AEC 2015 in the business community can be attributed to the lack of actual economic integration.”

A 2013 Deutsche Bank report on the AEC came to a similar view. “Thus far, the public impression of AEC is that it is driven by the government sector, which needs to be corrected …. AEC success depends crucially on private-sector involvement and public support. In this regard, greater efforts should be made to raise awareness of AEC among the business community to bring it on board,” it said.

Indeed, implementation does not equal integration. The ASEAN governments can only open doors, clear trade barriers, and prepare the infrastructure. This would only be an empty frame, however, without the private sector’s buy-in and involvement.

The next step for ASEAN governments thus would be to pitch, nay evangelise, the vision. Any takers?

Disclaimer: Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.


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May 22, 2014

Thai army stages coup after talks between rivals fail – เปิดเบื้องหลังนาทีรัฐประหาร

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Thai army stages coup after talks between rivals fail

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By Amy Sawitta Lefevre of Reuters

BANGKOK, May 22 (Reuters) – Thailand’s army chief General Prayuth Chan-ocha seized control of the government in a coup on Thursday, two days after he declared martial law, saying the military had to restore order and push through reforms after six months of turmoil.

The military declared a 10 p.m. until 5 a.m. curfew, suspended the constitution and told outgoing cabinet ministers to report to an army base in the north of the capital by the end of the day. Rival protest camps were ordered to disperse.

Thailand is locked in a protracted power struggle between supporters of ousted former premier Thaksin Shinawatra and opponents backed by the royalist establishment that has polarised the country and battered its economy.

“In order for the situation to return to normal quickly and for society to love and be at peace again … and to reform the political, economic and social structure, the military needs to take control of power,” Prayuth said in the televised address.

The general made his broadcast after a meeting to which he had summoned the rival factions in Thailand’s drawn-out political conflict, with the aim of finding a compromise to end six months of anti-government protests.

But no progress was made and Prayuth wound up the gathering by announcing he was seizing power, according to a participant.

The Thai armed forces have a long history of intervening in politics – there have been 18 previous successful or attempted coups since the country became a constitutional monarchy in 1932, most recently when Thaksin was deposed in 2006.

Hundreds of soldiers surrounded the meeting at Bangkok’s Army Club shortly before the coup announcement and troops took away Suthep Thaugsuban, leader of the protests against the pro-Thaksin government.

Some of the other meeting participants were being held back in the venue afterwards, said a Reuters reporter waiting outside.


The army ordered rival protest camps to break up and soldiers fired into the air to disperse thousands of pro-government “red shirt” activists gathered in Bangkok’s western outskirts, a spokesman for the group said.

Soldiers guard a checkpoint near an encampment of pro-government supporters in Nakhon Pathom province of Thailand on Thursday, May 22, 2014.

Reuters: Chaiwat Subprasom.  Soldiers guard a checkpoint near an encampment of pro-government supporters in Nakhon Pathom province of Thailand on Thursday, May 22, 2014.

The military detained at least one leader of the activists, said the spokesman, Thanawut Wichaidit.

A Reuters witness later said the protesters were leaving peacefully. Earlier their leader, Jatuporn Prompan, said they would continue their rally despite the coup.

The army had declared martial law on Tuesday, saying the move was necessary to prevent violence.

Twenty-eight people have been killed and 700 injured since the anti-government protests erupted late last year.

“Martial law may have been to test the waters, the army gave the opposing camps a chance to negotiate a way out but I think the endgame was always the military taking over,” said Kan Yuanyong of the Siam Intelligence Unit think-tank.

“The possibility of conflict is now much higher,” he said. “Thaksin will fight back.”

Former telecommunications tycoon Thaksin has lived in self-exile since 2008 to avoid a jail term for graft, but still commands the loyalty of legions of rural and urban poor and exerts a huge influence over politics, most recently through a government run by his sister, Yingluck Shinawatra.

He was not available for comment but a pro-Thaksin activist in his hometown of Chiang Mai said there was no immediate plan to protest.

“As of now we will not head to Bangkok, no plans. We will follow today’s situation closely first,” said Mahawon Kawang, a red shirt leader in Chiang Mai.


In a first round of talks on Wednesday, Prayuth had called on the two sides to agree on a compromise that would have hinged around the appointment of an interim prime minister, political reforms and the timing of an election.

But neither side backed down from their entrenched positions on Wednesday and again on Thursday, participants said.

“As we cannot find a way to bring the country to peace and everyone won’t back down I would like to announce that I will take power. Everyone must sit still,” Prayuth told the meeting, according to one participant who declined to be identified.

Thai soldiers patrol the streets near the Army Club in Bangkok after the army's announcement that it had taken over the government, on Thursday, on May 22, 2014.

Getty Images: Pornchai Kittiwongsakul, AFP.  Thai soldiers patrol the streets near the Army Club in Bangkok after the army’s announcement that it had taken over the government, on Thursday, May 22, 2014.

The army has also clamped down on the media, including partisan television channels, and warned people not to spread inflammatory material on social media.

Leaders of the ruling Puea Thai Party and the opposition Democrat Party, the Senate leader and the five-member Election Commission had joined the second round of talks on Thursday.

Acting Prime Minister Niwatthamrong Boonsongphaisan, who did not attend, told reporters before the talks that his government could not resign as its enemies were demanding as that would contravene the constitution.

“The government wants the problem solved in a democratic way which includes a government that comes from elections,” he said.

Yingluck was forced to step down as premier by a court two weeks ago, but her caretaker government, buffeted by six months of protests against it, had remained nominally in power.

Government officials were not available for comment after the coup announcement.

Thailand’s gross domestic product contracted 2.1 percent in January-March from the previous three months, largely because of the unrest, adding to fears it is stumbling into recession.

But weary investors have generally taken Thailand’s frequent political upheavals in their stride, and analysts said the impact on markets in Southeast Asia’s second largest economy might not be too severe.

“It’s back to the old days,” said Christopher Wong, senior investment manager at Aberdeen Asset Management Asia in Singapore. “Probably with the military coming in there’s a bit more stability. There may be a knee-jerk reaction … but as the dust settles it is probably back to normal.”

Thailand’s SET index closed before the coup announcement, ending 0.2 percent higher. The index is up 8 percent this year. The baht weakened to 32.54 to the dollar after the coup announcement, from 32.38 earlier.

The anti-government protesters want to rid the country of the influence of Thaksin, who they say is a corrupt crony capitalist who commandeered a fragile democracy and used taxpayers’ money to buy votes with populist giveaways.

They wanted a “neutral” interim prime minister to oversee electoral reforms before any new vote.

The government and its supporters said a general election that it would likely win was the best way forward and it had proposed polls on Aug. 3, to be followed by reforms.

(Additional reporting by Juarawee Kittisilpa; Writing by Robert Birsel; Editing by Alan Raybould and Alex Richardson)

เปิดเบื้องหลังนาทีรัฐประหาร “ชัยเกษม” ยันรัฐบาลไม่ออก – “บิ๊กตู่” ทุบโต๊ะลั่นงั้นนาทีนี้ผมยึดการปกครอง!

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วันที่ 22 พ.ค. แหล่งข่าวระดับสูงจากที่ประชุม 7 ฝ่ายที่กองอำนวยการรักษาความสงบเรียบร้อย (กอ.รส.) สโมสรกองทัพบก เปิดเผย “ข่าวสด” ถึงบรรยากาศก่อนที่ พล.อ.ประยุทธ์ จันทร์โอชา ผู้บัญชาการทหารบก ในฐานะหัวหน้าคณะรักษาความสงบแห่งชาติ (คสช.) จะประกาศยึดอำนาจ ว่า ผู้เข้าร่วมประชุมชุดเดิมที่เดินทางไปต่างรู้สึกได้ถึงความแตกต่างของ บรรยากาศการรักษาความปลอดภัยในวันนี้ที่ทางกองทัพได้จัดกำลังทหารเข้ามาดูแล ภายในตัวอาคารสโมสรกองทัพบกที่ใช้เป็นสถานที่หารือจำนวนมาก โดยแต่ละคนพกอาวุธประจำกาย ขณะเดียวกันบรรดาเสนาธิการทหาร ก็ได้เข้าร่วมประชุมอย่างพร้อมเพรียง ขณะที่วันที่ 21 พ.ค. ที่ผ่านมา แม้จะมีเจ้าหน้าที่ทหารประชำการในอาคารแต่ก็ไม่มีการพกพาอาวุธ และแต่ละเหล่าทัพก็มีเพียงผู้นำ หรือตัวแทนเหล่าทัพบางคนเท่านั้น นอกจากนี้ก่อนการหารือยังได้มีการขอเก็บเครื่องมือสื่อสารทุกชนิดของผู้เข้า ร่วมประชุม เนื่องจากการหารือเมื่อวันที่ 21 พ.ค. ได้มีภาพภายในห้องประชุมออกไปเผยแพร่ ทำให้ พล.อ.ประยุทธ์ ไม่อยากให้มีภาพในลักษณะดังกล่าวหยุดออกไปอีกและได้กีดกันผู้ติดตามให้ไปรอ ผู้ร่วมประชุมอีกชั้นหนึ่ง
อย่างไรก็ตาม เมื่อการประชุมเริ่มขึ้น พล.อ.ประยุทธ์ ได้เปิดโอกาสให้แต่ละฝ่ายได้เสนอแนวทางตามที่ได้ให้การบ้านไปก่อนหน้านี้ โดยแต่ละฝ่ายก็ยังคงนำเสนอแนวทางในมุมของตัวเองซึ่งเห็นว่าเป็นทางออกที่ดีที่สุดของประเทศแล้ว เมื่อแต่ละฝ่ายไม่มีจุดร่วมที่ตรงกันพล.อ.ประยุทธ์ ได้ขอพักการประชุมและเชิญแกนนำฝ่าย นปช. และ กปปส. ไปหารือร่วมกันอีกห้องหนึ่ง ประมาณ 45 นาที เมื่อกลับมาที่วงหารือแล้วก็ยังได้เชิญเฉพาะ นายจตุพร พรหมพันธ์ ประธานนปช. และนายสุเทพ เทือกสุบรรณ เลขาธิการกปปส. ไปพูดคุยกันส่วนตัวประมาณ 1 นาที ก่อนที่จะกลับมาที่วงหารือ
จากนั้นพล.อ.ประยุทธได้สอบถามนายชัยเกษม นิติสิริ รมว.ยุติธรรมในฐานะหัวหน้าคณะฝ่ายรัฐบาล ว่าตกลงรัฐบาลยืนยันไม่ลาออกทั้งรายบุคคลและทั้งคณะใช่หรือไม่ ซึ่งนายชัยเกษม ระบุว่า “นาทีนี้ไม่ลาออก” พล.อ.ประยุทธ์ จึงบอกว่า “ถ้างั้นตั้งแต่นาทีนี้ ผมตัดสินใจยึดอำนาจการปกครอง” จากนั้นก็ได้เชิญ ตัวแทน ส.ว. และ คณะกรรมการการเลือกตั้ง (กกต.) ออกจากที่ประชุม โดยไม่มีการควบคุมตัวไว้แต่ขอให้ยังอยู่ในพื้นที่สโมสรทหารบกเพื่อรอเคลียร์บุคคลไม่เกี่ยวข้องให้ออกจากพื้นที่ก่อน ส่วนตัวแทนจากฝ่ายอื่นๆ ก็ได้ถูกควบคุมตัวไปยังสถานที่หนึ่ง
เมื่อเวลา 17.30 น. ด้านนายศุภชัย สมเจริญ ประธานกกต. กล่าวกับผู้สื่อข่าวผ่านทางโทรศัพท์ว่า ขณะนี้ยังไม่สามารถออกจากพื้นที่สโมสรได้ เนื่องจากทางเจ้าหน้าที่ทหารกำลังเคลียร์คนออกจากพื้นที่แต่ไม่ได้มีการควบคุมตัว กกต. หรือ ส.ว. แต่อย่างใด และเท่าที่เห็นบรรยากาศก็ยังไม่มีเหตุรุนแรง ส่วนกกต.จะดำเนินการอย่างไรต่อไปนั้นคงต้องรอดูประกาศคำสั่งของ คสช.ก่อนหากมีการฉีกรัฐธรรมนูญองค์กรอิสระก็ต้องหยุดปฏิบัติหน้าที่ก่อน


April 22, 2014

AEC 2015 Prospects: Qualifying for FTA Tariffs


AEC 2015 Prospects: Qualifying for FTA Tariffs

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(Second in a five-part series)

Suits The


Emmanuel C.


ANY SAVVY executive knows that a deal isn’t done until the money is in the bank. The same may be said for the Association of Southeast Asian Nations (ASEAN) Trade in Goods Agreement (ATIGA), where negotiated tariff cuts are only meaningful when traders are able to use them.

Many more tariff cuts await enterprising companies in 2015 for goods including rice, sugar, and automotives, as discussed in the pilot of this five-part series on the ASEAN Economic Community (AEC). The next question, however, is how can traders qualify for such preferential tariffs?

So far, there has been mixed feedback on whether companies really take advantage of free trade agreements (FTAs) in the region. According to a 2009 study by Masahiro Kawai and Ganeshan Wignaraja of the Asian Development Bank, only 20% of companies surveyed in the Philippines said they were using FTAs, a rate bested by the 25% utilization in Thailand. Meanwhile, a figure from the ASEAN Secretariat quoted by the Department of Trade and Industry places the Philippines’ utilization at a less dire 41.15% in 2010.

One of the reasons firms reportedly hesitate to use FTAs is the cost associated with obtaining a Certificate of Origin, which proves that a certain good is made up of inputs from participating FTA members. Only then can it qualify for zero or lower tariffs. It is the exporter’s responsibility to secure this certificate so that the importer at the good’s destination can enjoy the preferential tariffs.

Obtaining the Certificate of Origin can be condensed into three steps. First, a trader must determine which FTA to use and what tariff rate is assigned to the product in question. For goods traded among Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, traders should apply the provisions of the ATIGA. Firms would also do well to take a look at ASEAN FTAs with Australia, China, India, Japan, Korea, and New Zealand if their business involves these countries. The right tariff code and tariff rate are stated on the importing country’s Schedule of Tariff Commitments, which is usually posted as an annex to the agreements on the ASEAN Web site.

The second step is to prove that the product to be exported is produced mainly in the ASEAN. Two criteria are used to indicate this: either (1) the item derives not less than 40% of its inputs from the region — a figure called the Regional Value Content (RVC), or (2) the non-ASEAN imported input was substantially transformed such that the tariff classification changes at the four-digit level.

If the exporter wants to qualify for preferential tariffs by demonstrating an RCV of not less than 40%, this can be computed directly by dividing the sum of the ASEAN material cost, direct labor, direct overhead, other costs, and profit over the good’s Freight on Board (FOB) price. Exporters are also allowed to meet the RVC rule through an indirect method of calculation wherein the value of non-originating materials is subtracted from the FOB price and the difference is divided by the FOB price. Supporting documents on these are needed for the application for and release of a Certificate of Origin.

Alternatively, an exporter may qualify for preferential tariffs by demonstrating a change in the tariff heading of the finished good. For instance, leather lining imported from Spain falls under Harmonized System Code (HSC) 6406.10.100. Assume that the leather lining is manufactured in the Philippines into shoes for export to the ASEAN. Since leather shoes are classified under HSC 6403.20.000, the first four numbers are different from that of the leather lining, and thus represent a substantial transformation. Because of this, the product is now eligible for preferential tariffs under ATIGA.

Once the Certificate of Origin is obtained, the third step is to send it to the importer who will then present the document to his or her country’s customs authority. Only then can the good enter its destination at the lower or zero tariffs provided by ATIGA or the other ASEAN FTAs.

Understandably, traders may find the process cumbersome, especially if they deal with fast-moving or perishable goods that cannot afford to be delayed by paperwork. Traders may also run into difficulties if they work with fledgling suppliers who may not be familiar with the systems needed to track the origin of inputs. This can be the case especially when a company applies for a certificate for the very first time for a certain product as there may be verification processes and ocular inspections to hurdle. While it can be faster to obtain a certificate for recurring shipments, it is important to note that Customs reserves the right of inspection whenever it deems it necessary. Recognizing this, some ASEAN members are trying out a self-certification program to make it even easier to avail of the preferential tariffs.

The Philippines, in particular, is part of the second pilot project on self-certification which aims to altogether do away with the process and instead allow qualified exporters to merely declare that their goods indeed comply with the rules of origin. Under Bureau of Customs (BoC) Administrative Order 06-2013 dated Dec. 12, 2013, exporters who wish to be certified must, among others, have been exporting to any ASEAN member state for at least a year, have officers who have sufficient knowledge and competence in the application of rules of origin and have undergone training on this pilot project conducted by BoC, and is a legitimate manufacturer or producer.

It should be emphasized, however, that the second pilot project counts Indonesia and Laos as the other participants, and in the meantime, self-certifications in the Philippines will only be honored in these participating countries. A separate pilot project implemented among Brunei, Malaysia, Thailand, and Singapore will end on Dec. 31, 2015. Hopefully, this will be replaced by a region-wide self-certification process.

This innovation — along with many others in the pipeline, such as the ASEAN Single Window for faster Customs clearance, harmonization of members’ product standards, and engagement with the private sector on non-tariff barriers — should further improve the ease and transparency of FTA usage in the region. A business-friendly regime for trade in goods, after all, is an essential complement to a thriving trade in services — which will be the topic for next week’s installment of this AEC series. Businesses have much to look forward to on the road ahead.

Emmanuel C. Alcantara is the head of the tax division of SGV & Co.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.



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