Questions On ASEAN - Japan CEP (AJCEP)

QUESTION

ANSWER

1.

What is the coverage of the ASEAN-Japan Closer Economic Partnership Agreement?

The AJCEP is based on the respective Economic Partnership Agreements (EPAs) Japan signed with ASEAN Member countries with improved offers and requests. AJCEP is a comprehensive agreement covering Trade in Goods, Trade in Services, Investment and Economic Cooperation. The Trade in Goods (TIG) Agreement was signed by circulation in March/April 2008 and entered into force on 1 December 2008. For Malaysia it entered into force on 1 February 2009.

Negotiations on the Services and Investment Chapters commenced are expected to be concluded by August 2011.

2.

How can Malaysian exporters benefit more from AJCEP compared to MJEPA?

·            Under MJEPA, tariff elimination by Japan is done through progressive liberalization over 5-10 years period. For AJCEP, there is immediate elimination for 11 tariff lines and accelerated elimination for 91 tariff lines products of export interest to Malaysia e.g. chemicals and petrochemicals, plastics, textiles, wood and agriculture products. Better concessions for agricultural products, tuna and cuttlefish are also accorded market access by Japan as compared with the concession provided under MJEPA.

·            There is also additional benefits in terms of ROO under AJCEP of which the regional ROO allows greater flexibility for companies to source inputs of production from various ASEAN countries and Japan (under regional cumulation principle). For MJEPA, only inputs sourced from Malaysia and Japan could be considered in the calculation of ROO.

·            Additionally, Malaysian companies can also benefit through offers made bilaterally in the respective EPAs of ASEAN member countries to Japan since the AJCEP is based on bilateral EPAs.

3.

For manufacturers importing materials or components from Japan for their productions, what are the tariff concessions they can enjoy from AJCEP?

To benefit from the lower tariff rates, importers in Malaysia have  to check whether the goods are included under the tariff reduction list. This can be done by checking the product HS Code in Malaysia’s Schedule contained in the AJCEP Agreement (accessible from MITI’s website : www.miti.gov.my).

Malaysia’s offer under AJCEP are:

(Note: 90.0% tariff lines for ASEAN-6 are subject to immediate elimination as in their bilateral EPAs with Japan).

4.

Are there other conditions exporters must fulfill in order to enjoy the preferential tariff?

Exporters must comply to the rules of origin (ROO) in order to benefit from the tariff concessions granted under the AJCEP.  In order to enjoy the preferential tariff, exporters must ensure that the finished products are either wholly obtained or comply with the Regional Value Content (RVC) of 40% or more and also the Product Specific Rules (PSR) for some selected products. In the calculation of RVC, materials or inputs sourced from all ASEAN countries and Japan are eligible.

In addition, in order for a product exported by Malaysia to enjoy preferential treatment in Japan, a Certificate of Origin (CoO) issued by the Ministry of International Trade and Industry Malaysia is required. The CoO is a certificate that can be used to satisfy your buyers that the products exported originate from Malaysia. The Form AJ can be purchased from the Federation of Malaysian Manufacturers (FMM). The Form AJ can be used for exports to both Japan and ASEAN countries.

5.

How do Malaysian exporters apply for the Certificate of Origin (CO)?

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 AJCEP based on Japan and ASEAN's schedules of tariff elimination/reduction.

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

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; or

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

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 AJ which can be purchased from Federation of Malaysian Manufacturers (FMM).    

For further details, please contact:

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

6.

The AJCEP Agreement covers Economic Cooperation. What are the areas of cooperation that Malaysia can take advantage of?

Malaysia can benefit through capacity building (training, technical expertise etc) through economic cooperation programmes under the CEP. There are additional areas of economic cooperation provided under the AJCEP, in addition to those provided for under the bilateral MJEPA. These additional areas are:

Ø   Trade Related Procedure

Ø   Business Environment

Ø   Energy

Ø   Transportation and Logistics

Ø   Competition Policy

Malaysia has benefitted from the economic cooperation programmes for the automotive sector under MAJAICO. Other areas of economic cooperation that Malaysian should take advantage of include HRD, ICT, SMEs, Science and Technology, Tourism and environment and education.