Questions On ASEAN - Korea (AKFTA)

AKFTA is a comprehensive Agreement covering trade in goods, trade in services, investment and economic cooperation. The  Framework Agreement on Comprehensive  Economic Cooperation between ASEAN and Korea was signed on 13 December 2005 and entered into force on 1 July 2006. With the Agreement, the establishment of a Free Trade Area between Korea and ASEAN will be realised in 2010.

Korea agreed to progressive elimination of tariffs by 2010 for ASEAN-6 and 2018 for Vietnam and 2020 for Cambodia, Lao PDR and Myanmar (CLM countries).

Duty elimination is carried out in the following phases:

The products excluded by Korea are fish and aquatic invertebrates (29 tariff lines), prepared foodstuffs (21 tariff lines), meat and edible offal (18 tariff lines), edible vegetables & certain roots (11 tariff lines), and cereal, edible fruits & nuts, coffee& tea and products of milling industry (19 tariff lines).

Malaysia excluded some 79 tariff lines of products covering wine and liquors, tobacco, used tyres, arms & ammunition and meat and edible offal. These products are excluded due to health, security and safety reasons.

Compliance to Rules of Origin (ROO) is important in exporting products under the preferential trading arrangements. To qualify for preferential tariffs under ASEAN-Korea FTA, exporters must meet two conditions: Regional Value Content (RVC) 40% or Change in Tariff Heading (CTH).

In other words, to qualify for the preferential tariffs under the AKFTA, exporters must have at least 40% regional value content or the product must have undergone some form of processing at the final point of exports.

Steps:

a) Obtain the ASEAN Harmonised Tariff Nomenclature (AHTN) or Harmonised System (HS) code from the Royal Customs of Malaysia for your product as well as every product and raw material used.

b) Check your product's eligibility under AKFTA based on India's schedules of tariff elimination/reduction.

c) Product for export must fulfill the condition of the rules of origin under AKFTA.

d) Download/get the Cost Analysis Application Forms i.e. BAK 1(a), BAK 1(b) and BAK 1(c). The forms can be obtained from:

i. MITI Website – .

ii. Service Counter (Ground Floor), Block 10, MITI, Government Offices Complex, Jalan Duta, 50622 Kuala Lumpur

iii. MITI's branch offices in respective states.

e) Completed Cost Analysis application forms must be submitted to:

Ministry of International Trade and Industry (MITI)
Trade Cooperation and Industry Coordination Section
Ground Floor, (Service Counter), Block 10
Government Offices Complex, Jalan Duta, Kuala Lumpur

Application must be also submitted with:
i. Form BAK 1(a): Details of Exporter/Manufacturer and Products
ii. Form BAK 1(b): Product's Cost Analysis
iii. Form BAK 1(c): Letter of Indemnity
iv. A copy of the following documents:
- Certificate of company's registration
- Invoices of raw material purchasing
- Sample/photograph/products catalogue.
- Flow chart of production process.

f) Once your application is approved, Malaysian exporters have to submit the Form AKFTA which can be purchased from the Federation of Malaysian Manufacturers (FMM). For further details, please contact:

Tel : 03 - 6286 7200
Fax : 03 – 62741266 / 7288www.fmm.org.my

Cumulation includes all ASEAN countries and Korea. The Form AKFTA can be used for export to Korea as well as export to other ASEAN countries.

Offers in the services sector by Korea include:

·         Business services;

·         Construction;

·         Distributive services;

·         Educational services;

·         Tourism and travel related services;

·         Computer related services;

·         Telecommunication services;

·         Transport services;

·         Research and development; and

·         Environmental services.

The ASEAN-Korea Investment Agreement which entered into force in September 2009 is aimed to promote investment flows and create a liberal, facilitative, transparent and competitive investment regime in ASEAN and Korea. This is done through:

Ø  Progressive liberalising the investment regime;

Ø  Creating conducive environment for ASEAN and Korean investors and their investments;

Ø  Promoting cooperation on a mutually beneficial basis;

Ø  Encouraging and promoting the flow of investments and cooperation between ASEAN and Korea;

Ø  Improving transparency of investment rules; and

Ø  Providing for the protection of investments.

Malaysian companies can take advantage of the economic cooperation programmes and capacity building in the following areas:

Ø  Tourism (joint promotion and marketing);

Ø  Construction (share expertise and technical knowhow);

Ø  Healthcare (healthcare training);

Ø  Agriculture (such as information exchange on Agriculture Extension Delivery System); and

Ø  Telecommunications (such as exchange of information and cooperation among enforcement agencies and educational institutions to give more focus on Intellectual Property Rights (IPR) protection).