ASEAN INDUSTRIAL COOPERATION (AICO)

Prepared by: Bunquin, Lady Elaine De Leon, Miriam Angela Mabiog, Kenn Mark Salazar, Maria Catherine

ASEAN INDUSTRIAL COOPERATION AICO (SCHEME)

The AICO Scheme is the latest industrial cooperation program in ASEAN superseded the ASEAN Industrial Joint Ventures (AIJV) and the Brand to Brand Complementation (BBC) Schemes. Signed on April 27, 1996 during the ASEAN Economic Minister Meeting in Singapore and entering into force on November 1, 1996, the Scheme seeks to promote the sharing of industrial activities between ASEAN-based companies. A minimum of two companies in two different ASEAN countries are required to form an AICO Arrangement. The AICO Scheme offers 0-5% preferential tariff rate. This preferential tariff rate is applicable to all products identified in the approved AICO arrangements. This would mean, all intermediate products and/or raw materials required in the manufacture of an AICO Final Products itself are entitled to the preferential tariff rates. The preferential tariff rates are exclusive and applicable only to the approved participating companies, products and countries.

Objectives of the AICO Scheme Improvement of the competitive position of ASEAN companies in the global and ASEAN markets by providing the means to apply the principles of economies of scale and scope in the manufacturing process. Supported by preferential import duties to enhance across ASEAN border transactions. Stimulation of intra and extra-ASEAN investment through complementation of industrial activities and networking as well as the improvement of the overall trade and investment prospects in ASEAN. Enlargement of the ASEAN market by utilizing complementary and improved intra ASEAN linkages.

AICO Arrangement It is a cooperative arrangement involving a minimum of two participating companies from two different ASEAN countries. An AICO Arrangement involves not only the physical movement of products between the participating companies and countries but also resource sharing, industrial complementation or other industrial cooperation activities.

Manufacturing companies that belong to the same group of companies or are administered by the same principal can apply to form intra-firm AICO arrangement AICO Final Products among themselves to exchange products that they specialize in. Under an intra-firm companies is deemed sufficient to satisfy the resource sharing, industrial complementation or industrial cooperation criterion of AICO.

The AICOs product coverage The Scheme is open to all categories of products except those articles falling under Article 9 (General Exception) of the Agreement on CEPT Scheme, quoted as follows: AICO products cover the following 3-tier product ranges: i. AICO Final Product shall be the final output which does not undergo any further processing within the specific AICO Arrangement; or ii. AICO Intermediate Products are those used within the AICO arrangement as an input to the AICO Final Product: or iii. AICO Raw Material shall be used as input to an intermediate product or as direct input to the AICO Final Product.

AICO Arrangement formed To form an AICO Arrangement, the prospective companies must: -be incorporated and operating in any ASEAN country. -have a minimum 30% national equity; and -Undertake resource sharing, industrial complementation or any industrial cooperation activities. For companies that cannot meet the equity condition, a waiver is possible if the proposing company meets other criteria imposed by the participating country in lieu of the 30% national equity. To make the AICO more attractive, the 30% equity requirement is automatically waived during the two-year period of 1999-2000.

Documents does the Bureau of Customs require to accompany an AICO product. i. ii. iii. iv. The normal shipping documents required to company an export shipment including any specific documentation required by the importing country. A copy of the Certificate of Eligibility of the AICO product, is issued by the ASEAN Secretariat. The Certificate of Origin Form D of the CEPT Scheme in quadruplicate, which certifies that the ASEAN content is at least 40%. For exports to the Philippines, a Pre-Shipment Assessment Report (PSI) issued by an agency authorized by the importing country confirming tariff code classification and import value of the goods for import duty assessment.

Philippine Participation in AICO Arrangements Since 1999, the Philippine has entered into twenty- nine(29) AICO Arrangements with Indonesia, Malaysia and Thailand as shown in the matrix below. In the exchange of AICO products, Philippine exports benefit from the grant of the preferential AICO rate of 0-5% by the co-participating countries whose MFN/ CEPT rates are higher than those of the Philippines.

Participating company 1999 1. Philippine Components Inc.(PAC) 2. Honda Philippines

Co-Participating Country/Company

AICO Products

Implementing Executive Order

Auto Thailand/Denso Thailand

Instrument clusters, dial EO 74 issued on for motorcycle meters ; January 15,1999 Motorcycle meters; lighting fittings;

Cars Malaysia/Oriental Assemblers Sdn. Bhd

CKD components parts EO 74 issued on for OEM of Honda January 15,1999 Accord, City, and Civic Thailand / Honda Cars passenger cars Thailand EO 74 issued on January 15,1999

3. Toyota Philippines

Motor Malaysia/ Assembly CKD components parts Services Sdn. Bhd. for OEM of TUV public transport type Thailand/Toyota Motor passenger motor Thailand vehicle and Corolla passenger car 4. Isuzu Philippines Thailand Isuzu Engine CKD components parts Corporation Manufacturing Co. for OEM of commercial Ltd. Isuzu Motors Co. vehicle (HiLander Ltd. model) 2000 5. Honda Philippine Inc.

EO 168 issued on October 18, 1999

Cars Indonesia / P.T. CKD components parts EO 198 issued on Honda Prospect Motor for OEM Honda models January 15. 2000 Civic, City and Accord Malaysia/Honda passenger cars. Autoparts Manufacturing (M) Sdn. Bhd. Indonesia/P.T. Honda Prospect Motor Indonesia/PT Nestle Sweetened cocoa blend EO 124 issued on Confectionery an sweetened skimmed February 16,2000 Indonesia milk Sweetened whey compound CKD component parts EO 215 issued on for OEM of Corolla and February 15,2000e Camry passenger cars and Toyota Utility Vehicle (TUV) for the Toyota transport of persons

6. Goya Inc.

Thailand/ Nestle Food Thailand Ltd. 7. Toyota Motor Malaysia/Assembly Philippines Corp. and Services Sdn. Bhd. Toyota Auto Parts and T&K Autoparts Philippines Sdn. Bhd. Indonesia/PT Astra Motors

Thailand/ Toyota Motor Thailand, Co. Ltd. and Siam Toyota Manufacturing Co. Ltd.)

8. Goya, Inc.

Malaysia/Malaysia Printed polyethylene EO 238 issued on Packaging Industry laminates, printed May 4, 2000 Bhd. polypropylene laminates and printed vacuum metalized (aluminum coated) cast poly propylene and printed aluminum wrapper as packaging materials for the manufacture of chocolate clairs and chocolate confectionery.

9. Ford Motor Company Thailand (Auto Component parts of EO 239 issued on Philippines , Inc. Alliance ( Thailand Laser LYNX passenger May 4, 2000 Company Limited) and component parts of Ranger Pick-ups Laguna Autoparts Mfg., Corp. (LAMCOR) Vacuum Pump Thailand Mitsubishi assemblies, yoke Electric Thai Auto assemblies, rotor Parts Co. Ltd.)effective assemblies and rear 03 January 2000. and front brackets

10. Matsushita Philippines Corporation (MEPCO)

Electric Indonesia/ PT National Electric fans and certain EO 319 issued on Gobel) parts/ components for November 17, electric fans. 2000 Malaysia Matsushita Electric Co., (M) Bhd. Thailand / Matsushita Seiko ( Thailand ) Co., Ltd

Toyota Philippines Corporation

(OEM) automotive Motor Indonesia /PT Toyota parts/components for Astra Motor Corolla passenger cars Malaysia/Assembly Services Sdn. Bhd.

Thailand / Toyota Motor Thailand Co. Ltd. (OEM) automotive parts/components for Mitsubishi Motors Thailand /(MMC MG Lancer Philippines Sittipol Co. Ltd. Corporation (MMPC) and Asian Transmission Corporation

2002 11. Honda Philippines Corporation Motor Indonesia/PT Prospect Honda (OEM) automotive EO 129 issued on parts/components for September 23, Honda CR-V Light 2007 commercial vehicles

Ford Motor Company Thailand / Auto Philippines, Inc. and Alliance Thailand Co. Ford Group Ltd. Philippines, Inc.)

(OEM) automotive parts/components for Ford Escape / Mazda Tribute & Ford Laser/ Mazda Protg passenger cars and completely built units (CBU) of Ford J97 Ranger Pick-up trucks for the transport of goods. (OEM) automotive EO 128 issued on parts/components for September 23, Toyota Corolla and 2002 Camry passenger cars

12. Toyota Philippines Corporation

Motor Malaysia/Assembly Services Sdn. Bhd. and T&K Autoparts Sdn. Bhd. Thailand /Toyota Thailand Co. Ltd.

13. Honda Cars Thailand/ Philippines Inc. Automobile Co. Ltd.

Honda (OEM) automotive EO 94 issued on Thailand parts/components for April 9, 2002 Honda CR-V, light commercial vehicle

14. Honda Cars Malaysia/ Oriental Philippines Inc. Assemblers Sdn. Bhd. and Honda Autoparts Manufacturing (M) Sdn. Bhd.) 15. Honda Philippines Corporation

(OEM) automotive EO 93 issued on parts/components for April 9, 2002 Honda CR-V, light commercial vehicle

Motor Thailand/ Honda (OEM) automotive EO 92 issued on Automobile ( Thailand parts/components for April 9, 2002 ) Co. Ltd. Honda Civic

16. Honda Philippines Corporation

Motor Thailand/ Automobile Co. Ltd.

Honda (OEM) automotive EO 89 issued on Thailand parts/components for March 18, 2002 Honda Civic passenger cars

17. Mitsuba Philippines Thailand/ Thai Summit Wiper motor EO 88 issued on Corporation Mitsuba Manufacturing components and the link March 18, 2002 Corporation, Ltd. units for the manufacture of wiper assembly

18. Toyota Motor Philippines Corporation and Toyota Autoparts Philippines

Indonesia/ PT Toyota (OEM) automotive EO 87 issued on Astra Motor parts/components for March 18, 2002 Corolla passenger cars Thailand/ Toyota Motor Thailand Co. Ltd. And Siam Toyota Manufacturing Co. Ltd. Indonesia /PT Honda Prospect Motor) (OEM) automotive parts/components for Honda Civic passenger cars (OEM) automotive parts/components for Nissan Sentra passenger cars

Honda Cars Philippines Inc.

Nissan Motor Philippines Inc.

Malaysia / Oriental Assemblers Sdn. Bhd. and Honda Autoparts Manufacturing (M) Sdn. Bhd. Malaysia / Tan Chong Motor Assemblies Sdn. Bhd. Blade ( Malaysia )Sdn. Bhd.)

19. GOYA Inc.

Indonesia/PT Indonesia

Nestle FOXs Fruit , FOXs EO 86 issued on Mints and POLO March 18 , 2002

2003 20. Philippines Auto Thailand/ Denso Component Inc. Thailand) Co., Ltd. ( Motorcycle meters EO 261 issued on Lighting fittings( bulbs) December 30, for instrument clusters 2003 Fan assembly shroud assembly and

Evaporators for airconditioning machines for motor vehicles

Upper/lower tanks; tanks subassembly , lower

Core Subassembly

21. Honda Cars Thailand/ Honda (OEM) automotive EO 260 issued on Philippines Inc. Automobile (Thailand) parts/components for December 30, Co. Ltd. Honda Civic passenger 2003 cars Malaysia ( Honda Malaysia Sdn. Bhd.) 22. (Nissan Motor Thailand Philippines Inc. ) Nissan Co., Ltd. / Siam (OEM) automotive EO 245 issued on Automobile parts/components for October 3, 2003 Nissan Sentra passenger cars EO 242 issued on October 3, 2003

23. Honda Cars Malaysia ( Honda Face, FR Bumper Philippines Inc. Malaysia Sdn. Bhd.) and Relay (Assy), Turn Signal Honda Autoparts Head Assy, Manufacturing (M) Cylinder Sdn. Bhd. Indonesia (PT. Honda Prospect Motor) 24. Philippine Auto Thailand/Denso Components Inc. Thailand Co., Ltd.

Fan assy and shroud EO 162 issued on assy; evaporators for January 9,2003 air-conditioning machines; upper/lower tanks Al radiators , subassy , lower tanks for Al radiators and core subassy ( Al radiators)

2004 25. Honda Cars Malaysia (Honda Components Face , FR EO 338 issued on Philippines Inc. Malaysia Sdn. Bhd. Bumper July 23, 2004 and Honda Autoparts Manufacturing Sdn. Bdk.) Various Parts Indonesia (PT Honda Components; Wheel Prospect Motor Assy, Strg; Pad Comp Strg Wheel 26. Honda Philippines Inc Cars Thailand/ Honda (OEM) automotive EO 337 issued on Automobile (Thailand) parts/components for July 23,2004 Co. Ltd. Honda Civic

2005 27. Toyota Motor Malaysia/ Assembly (OEM) automotive EO 479 issued on Philippines Services Sdn. Bhd) parts/components for December 23, Corporation and Toyota Innova 2005 Toyota Autoparts Philippines Inc.

28. Panasonic Manufacturing Corporation

Malaysia/ Matsushita Gas stoves, fully EO 445 issued on Electric Company ( automatic washing July 5, 2005 Malaysia ) Bhd. machines, and vacuum cleaners Panasonic HA AirConditioning (M) Sdn. Split type air Bhd. conditioners

Panasonic AVC Networks Kuala Colour television sets Lumpur Malaysia Sdn. Bhd.

2006 29. Philippine Auto Thailand/ ( Denso Motor Assy, W/ Fan Components Inc. Thailand) Co. Ltd Shroud Assy Fan Assy Cooling Unit Assy Evaporator Core condenser Pulley Assy Idle Magneto Starter Glow Plug Tank Upper Tank Lower Core Sub- Assy EO 526 issued on May 12, 2006

1. The new developments in the AICO At the 10th ASEAN Economic Ministers Retreat held on April 21, 2004 in Sentosa, Singapore, the Ministers signed the Protocol to amend the Basic Agreement on the AICO Scheme reducing the preferential tariff rate to 0% . Under the Protocol the preferential tariff rate for participating countries shall be within the band as follows: Countries Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia and Singapore Myanmar and Vietnam Philippines Thailand RATE OF DUTY 0%

0-5% 0-1% 0-3%

The ASEAN Member countries that are temporarily not ready to implement the preferential tariff rate of 0% shall work towards reducing the preferential tariff rate to 0% for AICO Arrangements by January 1, 2005.