Asean members start talks on AICO extension

Senior economic officials of the Association of Southeast Asian Nations have begun formal talks to bring down to zero the tariff rate for importations under the ASEAN Industrial Cooperation (AICO) scheme.

ASEAN member-nations have agreed to maintain the AICO arrangement even with the effectivity of the ASEAN Free Trade Agreement or AFTA.

The AICO is an industrial cooperation program to promote the sharing of activities between ASEAN-based companies.

A minimum of two companies in two different ASEAN countries are required to form an AICO arrangement, which not only involves physical movement of products between participating companies and countries, but also resource sharing and industrial complementation.

Approved products under the AICO enjoy a preferential tariff ranging from zero to five percent.

However, with the effectivity of AFTA by January 2003, the same tariff rates of zero to five percent will apply to almost all products, thus negating the preferential treatment currently enjoyed by those engaging in an AICO arrangement.

Several ASEAN countries, spearheaded by Malaysia, have expressed their desire to keep the AICO alive by completely dropping the tariff to zero.

Most of those who have availed of the AICO are automotive companies such as Ford and Nissan who have decided to specialize the production of certain models in different ASEAN countries and export/import other models among the ASEAN countries.

A few other manufacturing operations have also availed of the AICO scheme.

The possibility of extending the AICO was discussed during the recent Senior Economic Officials Meeting (SEOM) held here.