Hike in AICO minimum regional content proposed

To encourage the further development of small and medium enterprises in the Association of Southeast Asian Nations (ASEAN), a proposal has been made to increase the minimum regional content requirement under the ASEAN Industrial Cooperation (AICO) scheme.

The proposal to increase the minimum regional content under the AICO scheme was made by the Thai delegation during yesterday’s meeting of the Asean private sector working group on industry held at the penthouse of the Board of Investments (BOI).

BOI director Leticia Ibay said private sector participants noted that SMEs have not been given much attention under the AICO scheme.

Instead, only the big multinational companies benefit under the AICO scheme even though MNCs oftentimes source part of their requirements from SMEs.

The AICO scheme was implemented in 1997 to enable participants to enjoy accelerated tariff reduction through cooperative trade exchanges.

The AICO scheme was a step ahead of the common effective preferential tariff (CEPT) scheme under the AFTA which would take effect in 2003.

By availing themselves of the AICO scheme, participants could import goods at the preferential tariff rate of zero to five percent from a counterpart participant.

Ibay, however, said the participation of SMEs in the AICO scheme is constrained by the difficulty in checking their importations.

Under the allowed AICO importations, participants are issued certificates of eligibility (COEs) which state their effective tariff rates.

Ibay, however, said there was no clear proposal on how high will be the minimum regional content. At present, the regional content requirement is 40 percent. — Marianne Go