Asean-China pact will boost two-way investment

Asean trade ministers and Chinese Commerce Minister Chen Deming yesterday signed the investment agreement under the Free Trade Agreement during the 41st Asean Economic Ministers' meeting in Bangkok, which ends today.

"The agreement will bolster investment growth between us significantly by 40 to 60 per cent in the next couple of years. China will also become one of Asean's five largest foreign direct investors in the next two years," said Thai Commerce Minister Porntiva Nakasai.

Two-way combined invest-ment value reached US$11.7 billion (Bt398.5 billion) last year. China is the eighth largest foreign direct investor in Asean with accumulated investment of $6.1 billion. Asean accumulated investment in China reached $5.6 billion.

The agreement will come into effect on January 1. Negotiations began in 2003.

It will support foreign direct investment by giving non-discriminatory treatment to investors. Asean and China will compensate investors in case of expropriation and provide investor-state dispute settlement.

This will lead to an increase in green-field investment and sustainable reinvestment of profits by consistent rules to increase investor confidence, the Thai commerce minister said.

Chinese investors will do |more business in the region in |the food-processing and industrial sectors.

Thai investors will be able to increase their investment in China. From 2002 to last year, total investment from Thailand to China was worth $160 million.

Potential sectors of Thai in-vestment in China are agricul-ture, food-processing, automobiles and parts and electronic goods.

Deputy Commerce Minister Alongkorn Ponlaboot said the Chinese government had agreed to provide accumulated funds of $25 billion for Asean countries.

First it will provide a fund of $10 billion for Asean's development of logistics, construction and transportation.

Projects expected to benefit from the fund are the construction of railways from Kunming to Singapore via Bangkok and from Nanning to Singapore via Hanoi and Bangkok.

The Chinese government has also agreed to provide a soft loan of $15 billion to Asean countries developing logistics, transportation and agricultural infrastructure.

Details of the fund will be finalised during the October Asean leaders' summit, expected to be held in Phetchaburi's Cha-am district.

China and Asean also signed a cooperation agreement on intellectual-property rights to remove any trading barriers by creative economic policy on sustainable trade and investment growth, Alongkorn said.

Asean and China expect to complete service-sector liberalisation at the 12th Asean-China Summit in October, concluding a comprehensive pact between Asean and China.