Six Asean countries will abolish tariffs on most electronic products traded between them by next January, three years ahead of schedule, in a bid to claw back foreign investment from China and India, officials said.
Ramon Vicente Kabigting, a director at the Philippines' department of trade and industry said the six countries to accelerate the program were Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.
"Because it is a priority sector, 85 percent of the products will have zero tariff next year," he told AFP.
"Eighty-five percent of the products will cross the borders freely. This will lower costs and make the products more competitive," he added.
An Association of Southeast Asian Nations (Asean) official confirmed the move.
"Duties covered under the priority sector integration will be eliminated by January 2007," he told AFP on condition of anonymity.
Asean economic officials are meeting here ahead of next week's ministerial talks to chart the region's ambitious goal of advancing economic integration by five years to 2015.
The senior officials are preparing to brief the ministers on the status of preparations to abolish the tariffs.
Electronics is among 12 priority sectors that Asean plans to liberalise in its quest to form a regional economic community aimed at wooing back foreign investment that in recent years has been heading to China and India.
Kabigting said each country has a list of electronic goods that will enjoy zero tariffs but some have excluded finished consumer items like washing machines and air conditioners. "It means these items will only enjoy zero tariff rates come 2010," he said.
Electronic products make up some 50 percent of total intra- Asean trade.
Kabigting said Asean was no longer a major magnet for global foreign direct investments (FDIs), having fallen under the shadow of the Asia's emerging economic giants. "We were once where money was flowing into.
It is no longer Asean but China and India," he said.
Kabigting said the business community had complained to him that investing in China was more attractive because components for manufacturing could be easily sourced from anywhere within the country at competitive prices.